<PAGE>
As filed with the Securities and Exchange Commission on December 29, 1995
Registration Nos. 33-46593
811-6578
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 6 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 7 /X/
----------------------------
The Glenmede Portfolios
(Exact Name of Registrant as Specified in Charter)
135 East Baltimore Street
Baltimore, Maryland 21202
(Address of Principal Executive Offices)
Registrant's Telephone Number:
1-800-442-8299
Michael P. Malloy, Esq.
Secretary
Drinker Biddle & Reath
1100 Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[x] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously registered an indefinite number of securities
under the Securities Act of 1933 pursuant to Section (a)(1) of Rule 24f-2
under the Investment Company Act of 1940, as amended. Registrant's Rule
24f-2 Notice for the fiscal year ended October 31, 1995 was filed with the
Securities and Exchange Commission on December 21, 1995.
==============================================================================
<PAGE>
THE GLENMEDE FUND, INC.
Muni Intermediate Portfolio
New Jersey Muni Portfolio
CROSS REFERENCE SHEET
---------------------
Pursuant to Rule 495(a)
under the Securities Act of 1933
<TABLE>
<CAPTION>
Form N-1A Item Number Location
- --------------------- --------
Part A Prospectus Caption
- ------ ------------------
<S> <C> <C>
1. Cover Page........................................... Cover Page
2. Synopsis............................................. Expenses of the Portfolios
3. Condensed Financial Information...................... Financial Highlights; Performance
Calculations
4. General Description of Registrant.................... Cover Page; Investment
Objective and Policies;
Investment Techniques; Risk Factors;
Investment Limitations;
General Information
5. Management of the Fund............................... Investment Advisor; Administrative,
Transfer Agency and Dividend Paying
Services; Board Members and
Officers; Purchase of Shares;
Redemption of Shares;
6. Capital Stock and Other Securities................... Purchase of Shares; Redemption of
Shares; Dividends, Capital Gains
Distributions and Taxes;
General Information
7. Purchase of Securities Being Offered................. Valuation of Shares; Purchase of
Shares; Redemption of Shares
8. Redemption or Repurchase............................. Purchase of Shares; Redemption of
Shares
9. Pending Legal Proceedings............................ Not Applicable
</TABLE>
<PAGE>
THE GLENMEDE FUND, INC.
THE GLENMEDE PORTFOLIOS
135 East Baltimore Street, Baltimore Maryland 21202
- --------------------------------------------------------------------------------
1-800-442-8299
- -------------------------------------------------------------------------------
Prospectus -- February __, 1996
INVESTMENT OBJECTIVES
The Glenmede Fund, Inc., a Maryland corporation ("Glenmede Fund"), and The
Glenmede Portfolios, a Massachusetts business trust ("Glenmede Portfolios" and
collectively with Glenmede Fund, the "Funds"), are no-load, open-end management
investment companies. The Funds currently offer 12 series of shares, each of
which has different investment objectives and policies. The securities offered
hereby are six of these series of shares (known as "Portfolios") of the Funds
listed below.
Government Cash Portfolio. The objective of the Government Cash Portfolio is to
provide maximum current interest income consistent with the preservation of
capital and liquidity. The Government Cash Portfolio seeks to achieve its
objective by investing primarily in short-term money market instruments issued
by the U.S. Treasury, U.S. Government agencies, or other agencies, enterprises
or instrumentalities sponsored by the U.S. Government and by entering into
repurchase agreements secured thereby. It is anticipated that the Portfolio will
maintain a constant net asset value or price of $1.00 per share, and an average
weighted maturity of 90 days or less.
Tax-Exempt Cash Portfolio. The objective of the Tax-Exempt Cash Portfolio is to
provide maximum current interest income exempt from Federal income taxes
consistent with the preservation of capital and liquidity. The Tax-Exempt Cash
Portfolio seeks to achieve its objective by investing primarily in short-term,
high quality municipal securities ("Municipal Obligations"). It is anticipated
that the Portfolio will maintain a constant net asset value or price of $1.00
per share, and an average weighted maturity of 90 days or less.
Intermediate Government Portfolio. The objective of the Intermediate Government
Portfolio is to provide maximum, long-term total return consistent with
reasonable risk to principal. The Intermediate Government Portfolio seeks to
achieve its objective by investing primarily in mortgage-backed securities and
medium-term fixed income securities issued by the U.S. Treasury, U.S. Government
agencies, or other agencies, enterprises or instrumentalities sponsored by the
U.S. Government. The net asset value of this Portfolio will fluctuate.
Muni Intermediate Portfolio. The objective of the Muni Intermediate Portfolio is
to seek as high a level of current income exempt from Federal income tax as is
consistent with preservation of capital. The Muni Intermediate Portfolio seeks
to achieve its objective by investing primarily in Municipal Obligations. The
net asset value of this Portfolio will fluctuate.
New Jersey Muni Portfolio. The objective of the New Jersey Muni Portfolio is to
seek as high a level of current income exempt from Federal income tax as is
consistent with preservation of capital. The New Jersey Muni Portfolio seeks
to achieve its objective by investing primarily in Municipal Obligations. The
net asset value of this Portfolio will fluctuate.
International Fixed Income Portfolio. The objective of the International Fixed
Income Portfolio is to provide maximum long-term total return consistent with
reasonable risk to principal. The International Fixed Income Portfolio seeks to
achieve its objective by investing primarily in non-dollar denominated fixed
income securities, such as those issued by foreign governments and governmental
agencies and other agencies, enterprises or instrumentalities sponsored by
foreign governments. The net asset value of this Portfolio will fluctuate.
Total return consists of income (dividend and/or interest income from
portfolio securities) and capital gains and losses, both realized and
unrealized, from portfolio securities.
Shares of the Portfolios are subject to investment risks, including
possible loss of principal, are not bank deposits and are not endorsed by,
insured by, guaranteed by, obligations of or otherwise supported by the U.S.
Government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, The Glenmede Corporation or any of its affiliates or any governmental
agency or bank. There can be no assurance that the Government Cash or Tax-Exempt
Cash Portfolios will be able to maintain a stable net asset value of $1.00 per
share.
- -------------------------------------------------------------------------------
<PAGE>
ABOUT THIS PROSPECTUS
This Prospectus, which should be retained for future reference, sets
forth certain information that you should know before you invest. A Statement of
Additional Information ("SAI") containing additional information about the Funds
has been filed with the Securities and Exchange Commission. Such SAI dated
February __, 1996, as amended or supplemented from time to time, is
incorporated by reference into this Prospectus. The 199_ Annual Report to
Shareholders contains additional investment and performance information about
the Portfolios. A copy of the SAI and the 199_ Annual Report may be obtained,
without charge, by writing to the Funds at the address shown above or by calling
the Funds at the telephone number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
EXPENSES OF THE PORTFOLIOS
Client Fees and Annual Portfolio Operating Expenses
The following table illustrates the expenses and fees incurred by each
Portfolio for the fiscal year ended October 31, 1995, restated to reflect
new contractual arrangements.
<TABLE>
<CAPTION>
Inter-
Tax- New national
Government Exempt Intermediate Muni Jersey Fixed
Cash Cash Government Intermediate Muni Income
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- ------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses.......... None None None None None None
Maximum Annual Client Fee................. 1.00%+ 1.00%+ 1.00%+ 1.00%+ 1.00%+ 1.00%+
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fees.............. ____% ____% ____% ____% ____% ____%
Administration Fees................... ____% ____% ____% ____% ____% ____%
Other Expenses...................... ____% ____% ____% ____% ____% ____%
Total Annual Portfolio Operating
Expenses................................ ____% ____% ____% ____% ____% ____%
==== ==== ==== ==== ==== ====
</TABLE>
- -----------------------------
+ The Portfolios described in this prospectus do not pay any advisory fees to
The Glenmede Trust Company, the investment advisor of the Funds (the
"Advisor"), or its affiliates ("Affiliates"). However, investors in these
Portfolios must be clients of the Advisor or Affiliates. The "Maximum Annual
Client Fee" in the above table is the current maximum fee that the Advisor or
an Affiliate would charge its clients directly for fiduciary, trust and/or
advisory services (e.g., personal trust, estate, advisory, tax and custodian
services). The actual annual fees charged by the Advisor and its Affiliates
directly to their clients for such services vary depending on a number of
factors, including the particular services provided to the client, but are
generally under 1% of the client's assets under management. Investors may
also have to pay various fees to others to become clients of the Advisor or
an Affiliate. See "Investment Advisor."
The purpose of the above table is to assist an investor in
understanding the various estimated costs and expenses that an investor in a
Portfolio will bear directly or indirectly. Actual expenses may be greater or
lesser than such estimates. For further information concerning the Funds'
expenses see "Investment Advisor," "Administrative, Transfer Agency and Dividend
Paying Services" and "Board Members and Officers."
The following example illustrates the estimated Annual Portfolio
Operating Expenses that an investor would pay on a $1,000 investment over
various time periods assuming (i) a 5% annual rate of return and (ii) redemption
at the end of each time period. The example does not include fees for fiduciary
and investment services which investors pay the Advisor or Affiliates as
clients. See "Investment Advisor." As noted in the above table the Funds charge
no shareholder transaction expenses of any kind.
<PAGE>
<TABLE>
<CAPTION>
1 Year* 3 Years* 5 Years* 10 Years*
------- -------- -------- ---------
<S> <C> <C> <C> <C>
Government Cash Portfolio............. $__ $__ $__ $__
Tax-Exempt Cash Portfolio............. $__ $__ $__ $__
Intermediate Government Portfolio..... $__ $__ $__ $__
Muni Intermediate Portfolio........... $__ $__ $__ $__
New Jersey Muni Portfolio............. $__ $__ $__ $__
International Fixed Income Portfolio.. $__ $__ $__ $__
</TABLE>
*You would pay the same expenses set forth above on the same investment,
assuming no redemptions at the end of the period.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN
THOSE SHOWN.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables provide financial highlights of each Portfolio for
the respective periods presented. The data presented is derived from the Funds'
Financial Statements included in the Funds' 199_ Annual Report to
Shareholders, which Financial Statements and reports thereon of ______________,
the Funds' independent accountants, are incorporated by reference in the SAI.
The following information should be read in conjunction with such Financial
Statements. Glenmede Fund's Financial Statements for the periods ended October
31, 1991, 1990 and 1989 were examined by the Funds' previous independent
accountants, __________________.
<TABLE>
<CAPTION>
Government Cash Portfolio
---------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Period
Ended Ended Ended Ended Ended Ended Ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1995 1994 1993 1992 1991 1990 1989+
----------- ---------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net investment
income................ 0.038 0.031 0.041 0.064 0.081 0.089
-------- -------- -------- -------- -------- --------
Distributions from
net investment income. $(0.038) $(0.031) $(0.041) $(0.064) $(0.081) $(0.089)
-------- -------- -------- -------- -------- --------
Net asset value, end
of year............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= =======
Total return++.......... 3.78% 3.18% 4.19% 6.59% 8.41% 9.27%
======= ======= ======= ======= ======= =======
Ratios to average
net assets/
Supplemental data:
Net assets, end of year
(in 000's)........... $353,405 $247,816 $203,882 $253,260 $217,398 $229,555
Ratio of operating
expenses to average
net assets........... 0.11% 0.11% 0.13% 0.13% 0.15% 0.14%*
Ratio of net
investment income to
average net assets... 3.82% 3.14% 4.18% 6.45% 8.08% 9.00%*
</TABLE>
- -----------------
+ The Portfolio commenced operations on November 7, 1988.
++ Total return represents aggregate total return for the period indicated.
* Annualized.
<PAGE>
<TABLE>
<CAPTION>
Tax-Exempt Cash Portfolio
---------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Period
Ended Ended Ended Ended Ended Ended Ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1995 1994 1993 1992 1991 1990 1989+
----------- ---------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net investment income.... 0.025 0.023 0.033 0.047 0.057 0.061
Distributions from net
investment income...... $(0.025) $(0.023) $(0.033) $(0.047) $(0.057) $(0.061)
-------- -------- -------- -------- -------- --------
Net asset value,
end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total return++........... 2.48% 2.34% 3.30% 4.83% 5.85% 6.27%
======= ======= ======= ======= ======= =======
Ratios to average net
assets/Supplemental data:
Net assets, end of year
(in 000's)........... $222,985 $106,590 $125,826 $ 81,394 $107,283 $ 69,047
Ratio of operating
expenses to average net
assets................ 0.13% 0.13% 0.15% 0.16% 0.15% 0.15%*
Ratio of net investment
income to average net
assets................ 2.52% 2.33% 3.21% 4.78% 5.78% 6.31%*
</TABLE>
- -----------------
+ The Portfolio commenced operations on November 10, 1988.
++ Total return represents aggregate total return for the period indicated.
* Annualized.
<PAGE>
<TABLE>
<CAPTION>
Intermediate Government Portfolio
---------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Period
Ended Ended Ended Ended Ended Ended Ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1995 1994 1993 1992 1991 1990 1989+
----------- ---------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year..... $10.84 $10.76 $10.61 $10.11 $10.28 $10.00
-------- -------- -------- -------- -------- --------
Income from
investment operations:
Net investment income.. 0.64 0.66 0.74 0.87 0.88 0.86
Net realized and
unrealized gain/(loss)
on investments........ (0.96) 0.41 0.22 0.56 (0.07) 0.22
-------- -------- -------- -------- -------- --------
Total from investment
operations........... (0.32) 1.07 0.96 1.43 0.81 1.08
-------- -------- -------- -------- -------- --------
Less Distributions:
Distribution from net
investment income..... (0.63) (0.67) (0.70) (0.93) (0.89) (0.80)
Distributions from net
realized capital gains -- (0.32) (0.11) -- (0.09) --
-------- -------- -------- -------- -------- --------
Total Distributions... (0.63) (0.99) (0.81) (0.93) (0.98) (0.80)
-------- -------- -------- -------- -------- --------
Net asset value, end of
year.................. $9.89 $10.84 $10.76 $10.61 $10.11 $10.28
======== ======== ======== ======== ======== ========
Total return++......... (3.03)% 10.38% 9.34% 14.75% 8.32% 11.20%
======== ======== ======== ======== ======== ========
Ratios to average
net assets/Supplemental
data:
Net assets, end of year
(in 000's)............ $333,797 $581,823 $445,816 $265,963 $207,182 $187,012
Ratio of operating
expenses to average
net assets............ 0.12%** 0.14%** 0.16% 0.16% 0.14% 0.14%*
Ratio of net investment
income to average net
assets................ 6.06% 6.03% 7.03% 8.22% 8.75% 9.07%*
Portfolio turnover rate 165% 83% 39% 91% 94% 29%
</TABLE>
- -----------------
+ The Portfolio commenced operations on November 17, 1988.
++ Total return represents aggregate total return for the period indicated.
* Annualized.
** The annualized operating expense ratios exclude interest expense.
The ratios including interest expense for the years ended October 31, 1994
and October 31, 1993 were 0.14% and 0.16%, respectively.
<PAGE>
<TABLE>
<CAPTION>
Muni Intermediate Portfolio
--------------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
1995 1994 1993 1992+
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of year........................................ $ 10.59 $10.00 $10.00
------- ------ ------
Income from investment operations:
Net investment income.................................................. 0.53 0.44 0.11
Net realized and unrealized gain/(loss) on investments................. (0.85) 0.59 (0.03)
------- ------ ------
Total from investment operations..................................... (0.32) 1.03 0.08
Distributions from net investment income.................................. (0.53) (0.44) (0.08)
------- ------ ------
Net asset value, end of period............................................ $9.74 $10.59 $10.00
======= ====== ======
Total return++............................................................ (3.13)% 10.54% 0.74%
======= ====== ======
Ratios to average net assets/Supplemental data:
Net assets, end of period (in 000's) $22,097 $94,803 $42,533
Ratio of operating expenses to average net assets......................... 0.25% 0.25% 0.25%*
Ratio of net investment income to average net assets...................... 4.78% 4.41% 4.22%*
Portfolio turnover rate................................................... 11% 10% 3%
</TABLE>
- --------------------------
+ The Portfolio commenced operations on June 5, 1992.
++ Total return represents aggregate return for the period indicated.
* Annualized.
<PAGE>
<TABLE>
<CAPTION>
New Jersey
Muni Portfolio
--------------------------------
Year Year
Ended Ended
October 31, October 31,
1995 1994+
----------------------------------
<S> <C> <C>
Net asset value, beginning of period............................................ $10.00
- ----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income....................................................... 0.32
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments............................. (0.82)
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations.......................................... (0.50)
- ----------------------------------------------------------------------------------------------------------------
Distributions from net investment income........................................ (0.28)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period.................................................. $9.22
- ----------------------------------------------------------------------------------------------------------------
Total return++.................................................................. (5.13)%
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets/Supplemental data:
Net assets, end of period (in 000's)........................................ $4,564
- -----------------------------------------------------------------------------------------------------------------
Ratio of operating expenses to average net assets........................... 0.60%
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets........................ 3.60%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate..................................................... 65%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
+ The Portfolio commenced operations on November 1, 1993.
++ Total return represents aggregate total return for the period indicated.
<PAGE>
<TABLE>
<CAPTION>
International Fixed Income Portfolio
-----------------------------------------------
Year Year Period
Ended Ended Ended
October 31, October 31, October 31,
1995 1994 1993+
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period........................................... $ 10.45 $ 10.00
------- -------
Income from investment operations:
Net investment income....................................................... 0.65 0.40
Net realized and unrealized gain on investments............................. 0.34 0.59
-------- --------
Total from investment operations........................................... 0.99 0.99
-------- --------
Less Distributions:
Distributions from net investment income.................................... (0.66) (0.45)
Distributions in excess of net investment income............................ (0.46) -
Distributions from net realized capital gains............................... (0.07) (0.09)
-------- --------
Total Distributions........................................................ (1.19) (0.54)
------ ------
Net asset value, end of period................................................. $ 10.25 $ 10.45
======= =======
Total return++................................................................. 9.79% 10.13%
======== =======
Ratios to average net assets/Supplemental data:
Net assets, end of period (in 000's)........................................ $16,584 $15,801
Ratio of operating expenses to average net assets 0.24% 0.24%*
Ratio of net investment income to average net assets 5.99% 6.04%*
Portfolio turnover rate..................................................... 39% 27%
</TABLE>
- --------------
+ The Portfolio commenced operations on November 2, 1992.
++ Total return represents aggregate total return for the period indicated.
* Annualized.
<PAGE>
PERFORMANCE CALCULATIONS
From time to time, the Government Cash Portfolio and the Tax-Exempt
Cash Portfolio (each a "Cash Portfolio," collectively, the "Cash Portfolios")
may advertise or quote its "yield" and "effective yield." The "yield" of either
of the Cash Portfolios refers to the income generated by an investment in each
such Portfolio over a seven-day period (which period will be stated in the
advertisement or quote). This income is then "annualized." That is, the amount
of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in such a Portfolio is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
The Intermediate Government, Muni Intermediate, New Jersey Muni and
International Fixed Income Portfolios may also advertise or quote yield data
from time to time. The yield of such Portfolios is computed based on the net
income of the Portfolio during a 30-day (or one-month) period, which period will
be identified in connection with the particular yield quotation. More
specifically, each such Portfolio's yield is computed by dividing the
Portfolio's net income per share during a 30-day (or one-month) period by the
maximum offering price per share on the last day of the period and annualizing
the result on a semi-annual basis.
The Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios'
"tax-equivalent yields" may be advertised or quoted from time to time. The tax
equivalent yield shows the level of taxable yield needed to produce an after-tax
equivalent to each such Portfolio's tax-free yield. This is done by increasing
each such Portfolio's yield (calculated as above) by the amount necessary to
reflect the payment of Federal and/or State income tax at a stated tax rate.
Each of the Intermediate Government, Muni Intermediate, New Jersey Muni
and International Fixed Income Portfolios may advertise or quote total return
data from time to time. Total return will be calculated on an average annual
total return basis, and may also be calculated on an aggregate total return
basis, for various periods. Average annual total return reflects the average
annual percentage change in value of an investment in the particular Portfolio.
Aggregate total return reflects the total percentage change in value over the
measuring period. Both methods of calculating total return assume that dividend
and capital gains distributions made by the Portfolio during the period are
reinvested in additional Portfolio shares.
Each of the Intermediate Government, Muni Intermediate, New Jersey Muni
and International Fixed Income Portfolios may compare their total returns, and
their yields, to that of other investment companies with similar investment
objectives and to bond and other relevant indices such as those compiled by
Merrill Lynch, Salomon Brothers, Lehman Brothers or others or to rankings
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds. For example, the total return or
the yield of the Intermediate Government, Muni Intermediate, New Jersey Muni or
International Fixed Income Portfolios may be compared to data prepared by Lipper
Analytical Services, Inc. Total return and yield data as reported in national
financial publications such as Money Magazine, Forbes, Barron's, The Wall Street
Journal and The New York Times, or in publications of a local or regional
nature, may also be used in comparing the performance of the Intermediate
Government, Muni Intermediate, New Jersey Muni or International Fixed Income
Portfolios.
Performance quotations represent a Portfolio's past performance, and
should not be considered as indicative of future results. Since performance will
fluctuate, performance data for a Portfolio should not be used to compare an
investment in the Portfolio's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield/return for a stated period of time. Shareholders should remember
that performance is generally a function of the kind and quality of the
instruments held in a Portfolio, portfolio maturity, operating expenses and
market conditions. Any management fees charged by the Advisor or an Affiliate to
its respective clients will not be included in the Portfolio's calculations of
yield, effective yield, tax-equivalent yield or total return. See "Investment
Advisor."
<PAGE>
INVESTMENT POLICIES AND RISK FACTORS
The investment objective of each Portfolio is not fundamental and may
be changed by the particular Funds' Board members without shareholder approval.
GOVERNMENT CASH PORTFOLIO
The objective of the Government Cash Portfolio is to provide maximum
current interest income consistent with the preservation of capital and
liquidity. The Government Cash Portfolio seeks to achieve its objective by
investing in short-term U.S. dollar-denominated money market instruments issued
by the U.S. Treasury, U.S. Government agencies, or other agencies, enterprises
or instrumentalities sponsored by the U.S. Government and by entering into
repurchase agreements secured thereby. During normal market conditions, the
Portfolio will invest at least 65% of its total assets in such instruments.
The Portfolio may invest in the following securities provided they are
"eligible securities," as defined below ("Eligible Securities"), which the
Advisor believes presents minimal credit risk at the time of purchase: (i)
straight-debt and mortgage-backed obligations issued by the U.S. Government or
its sponsored agencies, enterprises or instrumentalities; (ii) securities of
international institutions (Asian Development Bank, Export-Import Bank, Inter
American Development Bank, International Bank for Reconstruction and
Development, Government Trust Certificates, Private Export Funding Corp. and
Agency for International Development) which are not direct obligations of the
U.S. Government but which involve governmental agencies, instrumentalities or
enterprises (such investments will represent no more than 25% of the Portfolio's
total assets); and (iii) any publicly or privately placed, unrated securities
issued by the U.S. Government, its agencies, enterprises or instrumentalities,
including floating and variable rate securities, which, in the Advisor's
opinion, are equivalent in credit quality to securities rated AAA by Standard &
Poor's Ratings Group, Division of McGraw Hill ("S&P") or Aaa by Moody's
Investors Service, Inc. ("Moody's"). The Portfolio will invest in securities
maturing within 13 months from the date of purchase, except that securities
collateralizing repurchase agreements may bear maturities exceeding 13 months,
and the Portfolio may also purchase bonds with longer final maturities if such
bonds pursuant to a demand feature provide for an earlier redemption date within
13 months from the date of purchase.
Obligations of certain agencies and instrumentalities of the U.S.
Government, such as the Government National Mortgage Association and the
Export-Import Bank of the United States, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Student Loan Marketing Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Federal Farm Credit
Banks or the Federal Home Loan Mortgage Corporation, are supported only by the
credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law.
Securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities have historically involved little risk of loss of
principal if held to maturity. However, due to fluctuations in interest rates,
the market value of such securities may vary during the period a shareholder
owns shares of the Portfolio. See "Investment Policies -- Intermediate
Government Portfolio" for a description of obligations of certain agencies,
enterprises and instrumentalities of the U.S. Government. Securities in which
the Government Cash Portfolio may invest may not earn as much income as longer
term and/or lower quality securities.
The Government Cash Portfolio will limit its purchases of any one
issuer's securities (other than U.S. Government securities) to 5% of the
Portfolio's total assets at the time of purchase, except that it may invest more
than 5% (but no more than 25%) of its total assets in First Tier Securities (as
defined below) of one issuer for a period of up to three business days. The
Portfolio will also limit its purchases of Second Tier Securities (Eligible
Securities which are not First Tier Securities) of one issuer to the greater of
1% of its total assets or $1 million. Eligible Securities are: (i) securities
(or their issuers) rated in one of the two highest rating categories of a
nationally recognized statistical rating organization (an "NRSRO"), provided
that if they are rated by more than one NRSRO, at least one other NRSRO rates
them in one of its two highest categories; and (ii) unrated securities
determined to be of comparable quality at the time of purchase. First Tier
Securities are: (i) securities (or issuers) rated in the highest rating category
by the only NRSRO rating them; (ii) securities (or their issuers) in the highest
rating category of at least two NRSROs, if more than one NRSRO has rated them;
(iii) securities that have no short-term rating, but have been issued by an
issuer that has other outstanding short-term obligations that have been rated in
accordance with (i) or (ii) above and are comparable in priority and security to
such securities; and (iv) certain unrated securities that have been determined
to be of comparable quality to such securities.
<PAGE>
For a description of other securities in which the Portfolio may
invest, see "Common Investment Policies and Risk Factors."
TAX-EXEMPT CASH PORTFOLIO
The objective of the Tax-Exempt Cash Portfolio is to provide maximum
current interest income exempt from Federal income taxes consistent with the
preservation of capital and liquidity. The Tax-Exempt Cash Portfolio seeks to
achieve its objective by investing primarily in short-term, high quality
Municipal Obligations (defined below). Under normal circumstances, at least 80%
of the net assets of the Portfolio will be invested in Municipal Obligations,
the interest on which, in the opinion of bond counsel or the issuer's counsel,
is exempt from regular Federal income tax and does not constitute an item of tax
preference for purposes of the Federal alternative minimum tax ("Tax-Exempt
Interest"). Glenmede Fund will use its best efforts to not invest any of the
Tax-Exempt Cash Portfolio's assets in Municipal Obligations the interest on
which constitutes an item of tax preference for purposes of the Federal
alternative minimum tax.
Municipal Obligations in which the Portfolio may invest include the
following, provided at the time of purchase they are Eligible Securities which
the Advisor believes presents minimal credit risk: project notes, demand notes,
short-term municipal obligations (including tax anticipation notes, revenue
anticipation notes, bond anticipation notes, tax and revenue anticipation notes,
construction loan notes, and short-term discount notes) rated SP-1+ or SP-1 by
S&P or MIG-1 by Moody's; tax-exempt commercial paper rated A-1+ or A-1 by S&P or
Prime-1 by Moody's; municipal bonds with a remaining effective maturity of 13
months or less, rated AA or better by S&P or Aa or better by Moody's; variable
rate demand notes rated "VMIG-1" by Moody's; and any non-rated tax-exempt,
privately placed securities which, in the Advisor's opinion, are equivalent in
credit quality to an AA or Aa-rated security as determined by S&P or Moody's,
respectively.
The Portfolio will invest in securities maturing within 13 months from
the date of purchase, except that securities collateralizing repurchase
agreements may bear maturities exceeding 13 months; and the Portfolio may
purchase bonds with final maturities exceeding 13 months if such bonds pursuant
to a demand feature provide for an earlier redemption date within 13 months from
the date of purchase.
Municipal Obligations. The two principal classifications of Municipal
Obligations are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special or specific excise tax or other specific revenue source such as the user
of the facility being financed. Revenue securities include private activity
bonds which are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of private activity bonds is usually directly
related to the credit standing of the corporate user of the facility involved.
Municipal Obligations may also include "moral obligation" bonds, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation bonds is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
Municipal Obligations may include variable rate demand notes, provided
they are Eligible Securities. Such notes are frequently not rated by credit
rating agencies, but unrated notes will be purchased by the Portfolio if they
are comparable in quality at the time of the purchase to rated Eligible
Securities as determined by the Advisor. Where necessary to ensure that a note
is an Eligible Security, the Portfolio will require that the issuer's obligation
to pay the principal of the note be backed by an unconditional bank letter or
line of credit, guarantee or commitment to lend. While there may be no active
secondary market with respect to a particular variable rate demand note
purchased by the Portfolio, the Portfolio may, upon the notice specified in the
note, demand payment of the principal of the note at any time or during
specified periods not exceeding 13 months, depending upon the instrument
involved. The absence of such an active secondary market, however, could make it
difficult for the Portfolio to dispose of a variable rate demand note if the
issuer defaulted on its payment obligation or during the periods that the
Portfolio is not entitled to exercise its demand rights. The Portfolio could,
for this or other reasons, suffer a loss to the extent of the default. The
Portfolio invests in variable rate demand notes only when the Advisor deems the
investment to involve minimal credit risk. The Advisor also monitors the
continuing creditworthiness of issuers of such notes and parties providing
credit enhancement to determine whether the Portfolio should continue to hold
the notes.
<PAGE>
For a further discussion of Municipal Obligations, see the Appendix to
the Statement of Additional Information.
For a description of other securities in which the Portfolio may
invest, see "Common Investment Policies and Risk Factors."
INTERMEDIATE GOVERNMENT PORTFOLIO
The objective of the Intermediate Government Portfolio is to provide
maximum, long-term total return consistent with reasonable risk to principal.
The Intermediate Government Portfolio seeks to achieve its objective by
investing primarily in mortgage-backed securities and medium-term fixed income
securities issued by the U.S. Treasury, U.S. Government agencies, or other
agencies, enterprises or instrumentalities sponsored by the U.S. Government. The
Portfolio seeks to achieve consistent results over the long-term. While
portfolio securities will be traded, the Portfolio is not expected to engage in
active trading under normal circumstances. The net asset value of the Portfolio
will fluctuate, and it is anticipated that the Portfolio will maintain an
average weighted maturity of 3 to 10 years.
The Portfolio may invest in the following securities: (i) straight-debt
and mortgage-backed obligations issued by the U.S. Government or its sponsored
agencies, enterprises or instrumentalities; (ii) securities of international
institutions which are not direct obligations of the U.S. Government but which
involve governmental agencies, enterprises or instrumentalities; (iii) any other
publicly or privately placed, unrated securities issued by the U.S. Government,
its agencies, enterprises or instrumentalities, which, in the Advisor's opinion,
are equivalent in credit quality to securities rated AAA by S&P or Aaa by
Moody's; and (iv) mortgage-backed obligations which are privately issued with a
rating of at least AA by S&P or Aa by Moody's or which if unrated, are in the
Advisor's opinion equivalent in credit quality to either such rating. Any of the
above securities may be variable or floating rate. Under normal circumstances,
at least 65% of the Intermediate Government Portfolio's total assets will be
invested in U.S. government securities and repurchase agreements relating
thereto and no more than 35% of the value of its total assets will be invested
in the securities described in (ii) and (iv) of the first sentence of this
paragraph.
Mortgage-Backed Obligations. Mortgage-backed obligations represent an
ownership interest in a pool of residential mortgage loans, the interests in
which are issued and guaranteed by an agency or instrumentality of the U.S.
Government, though not necessarily by the U.S. Government itself.
One such type of mortgage-backed obligation in which the Portfolio may
invest is a Government National Mortgage Association ("GNMA") Certificate. GNMA
Certificates are backed as to the timely payment of principal and interest by
the full faith and credit of the U.S. Government. Another type is a Federal
National Mortgage Association ("FNMA") Certificate; the principal and interest
of which are guaranteed only by FNMA itself, not by the full faith and credit of
the U.S. Government. Another type is a Federal Home Loan Mortgage Association
("FHLMC") Participation Certificate. This type of obligation is guaranteed by
FHLMC as to timely payment of principal and interest. However, like a FNMA
security, it is not guaranteed by the full faith and credit of the U.S.
Government. Another type is a privately issued obligation with a rating of at
least AA by S&P or Aa by Moody's or which if unrated, is in the Advisor's
opinion equivalent in credit quality to either such rating. Mortgage-backed
obligations issued by private issuers, whether or not such obligations are
subject to guarantees by the private issuer, may entail greater risk than
obligations directly or indirectly guaranteed by the U.S. Government.
Mortgage-backed obligations are characterized by monthly payments to
the security holder, reflecting the monthly payments, net of certain fees, made
by the mortgagors of the underlying mortgage loans. The payments to the security
holders (such as the Portfolio), similar to the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time (such as thirty years) the borrowers
can, and typically do, repay them sooner. Thus, the security holders frequently
receive prepayments of principal, in addition to the principal which is part of
the regular monthly payments. A borrower is more likely to prepay a mortgage
which bears a relatively high rate of interest. Therefore, in times of declining
interest rates, some of the Portfolio's higher yielding securities might be
repaid and thereby converted to cash and the Portfolio will be forced to accept
lower interest rates when that cash is used to purchase additional securities.
The Portfolio normally will not distribute principal payments (whether regular
or prepaid) to its shareholders. Interest received by the Portfolio will,
however, be distributed to shareholders in the form of dividends. For a further
discussion of mortgage-backed obligations, see the Appendix to the Statement of
Additional Information.
<PAGE>
Although government-guaranteed or sponsored securities reduce credit
risk (the possibility that issuers of bonds will default on payments of interest
and principal), the Portfolio's shares are still subject to the risk of market
value fluctuations inherent in owning fixed income securities. The market value
of securities held by the Intermediate Government Portfolio is expected to vary
according to, among other factors, changes in prevailing interest rates and the
average weighted maturity of the Portfolio maintained by the Advisor. In
general, if interest rates increase from the time a fixed income investment is
made, the market value of that investment is likely to decline. Similarly, if
interest rates fall from the time a fixed income investment is made, the market
value of that investment is likely to increase. Also, in general, for a given
change in interest rates, a fixed income investment with a longer maturity is
likely to fluctuate more in market value than a comparable investment with a
shorter maturity. An investment in the Intermediate Government Portfolio is
expected to be subject to such market risks.
For a description of other securities in which the Intermediate
Government Portfolio may invest, see "Common Investment Policies and Risk
Factors."
MUNI INTERMEDIATE PORTFOLIO AND NEW JERSEY MUNI PORTFOLIO
The objective of each of the Muni Intermediate and New Jersey Muni
Portfolios is to seek as high a level of current income exempt from Federal
income tax as is consistent with preservation of capital. To the extent
possible, the Muni Intermediate Portfolio seeks to achieve its objective by
investing primarily in intermediate and long-term Municipal Obligations issued
by the Commonwealth of Pennsylvania and its political subdivisions, agencies,
instrumentalities and authorities ("Pennsylvania Municipal Obligations") and the
New Jersey Muni Portfolio seeks to achieve its objective by investing
primarily in intermediate and long-term Municipal Obligations issued by the
State of New Jersey and its political subdivisions, agencies, instrumentalities
and authorities ("New Jersey Municipal Obligations"). Municipal Obligations
acquired by these Portfolios will be rated at the time of purchase within the
three highest ratings assigned by Moody's (i.e., Aaa, Aa, A) or by S&P (AAA, AA,
A) in the case of bonds, rated SP-1 or higher by S&P or MIG-2 or higher by
Moody's in the case of notes, rated A-1 or higher by S&P or Prime-1 or higher by
Moody's in the case of tax-exempt commercial paper or in unrated securities
determined by the Advisor at the time of purchase to be of comparable quality.
If a portfolio security is reduced below A by Moody's or S&P, the Advisor will
dispose of the security in an orderly fashion as soon as practicable. The Muni
Intermediate and New Jersey Muni Portfolios may not be able to achieve as high a
level of current income under all market conditions as would be possible if they
were permitted to invest in lower quality and longer term securities which,
however, generally are less liquid, have greater market risk and are generally
subject to more fluctuation of market value. See "Investment
Policies--Tax-Exempt Cash Portfolio" for a description of Municipal Obligations
and the Appendix to the SAI for a description of Moody's and S&P's ratings.
To the extent possible, during normal market conditions at least 65% of
the net assets of the New Jersey Muni Portfolio will be invested in New Jersey
Municipal Obligations. It is anticipated that the New Jersey Portfolio and the
Muni Intermediate Portfolio will each maintain an average weighted maturity of
three to ten years.
During normal market conditions: up to 20% of each Portfolio's net
assets may be invested in securities which are not Municipal Obligations; and at
least 80% of the Portfolio's net assets will be invested in intermediate and
long-term Municipal Obligations, the interest on which is Tax-Exempt Interest.
Each of the Portfolios may invest up to 20% of its net assets in Municipal
Obligations, the interest on which is exempt from regular Federal income tax but
is an item of tax preference for purposes of the Federal alternative minimum
tax. During temporary defensive periods, each Portfolio may invest without
limitation in obligations which are not Municipal Obligations and may hold
without limitation uninvested cash reserves. Such securities may include,
without limitation, bonds, notes, variable rate demand notes and commercial
paper, provided such securities are rated within the relevant categories
applicable to Municipal Obligations set forth above, or if unrated, are of
comparable quality as determined by the Advisor and may also include, without
limitation, other debt obligations, such as bank obligations which are also of
comparable quality as determined by the Advisor. Each Portfolio may acquire
"stand-by commitments" with respect to Municipal Obligations held by it. Under a
stand-by commitment, a dealer agrees to purchase, at the Portfolio's option,
specified Municipal Obligations at a specified price. The acquisition of a
stand-by commitment may increase the cost, and thereby reduce the yield, of the
Municipal Obligation to which such commitment relates. Each Portfolio will
acquire stand-by commitments solely to facilitate portfolio liquidity and does
not intend to exercise its rights thereunder for trading purposes.
<PAGE>
Each Portfolio is classified as non-diversified under the Investment
Company Act of 1940, as amended (the "1940 Act"). Investment returns on a
non-diversified portfolio typically are dependent upon the performance of a
smaller number of securities relative to the number held in a diversified
portfolio. Consequently, the change in value of any one security may affect the
overall value of a non-diversified portfolio more than it would a diversified
portfolio. Additionally, a non-diversified portfolio may be more susceptible to
economic, political and regulatory developments than a diversified portfolio
with a similar objective.
Since each of the Muni Intermediate and New Jersey Muni Portfolios will
invest primarily in securities issued by issuers located in one state, each of
these Portfolios is susceptible to adverse changes in value due to changes in
the economic condition and governmental policies of that state and its political
subdivisions, agencies, instrumentalities and authorities. A comparable
municipal bond fund which is not concentrated in obligations issued by issuers
located in one state would be less susceptible to these risks. If any issuer of
securities held by one of these Portfolios is unable to meet its financial
obligations, that Portfolio's income, capital, and liquidity may be adversely
affected.
With respect to the Commonwealth of Pennsylvania, although the balance
in the General Fund of the Commonwealth (the principal operating fund of the
Commonwealth) declined to a zero balance at the close of fiscal 1989, and a
negative balance was experienced in fiscal 1990 and 1991, tax increases and
spending decreases helped return the General Fund balance to a surplus at June
30, 1992 of $87.5 million and at June 30, 1993 of $698.9 million. The deficit in
the Commonwealth's unreserved/undesignated funds of prior years was also
reversed to a surplus of $64.4 million as of June 30, 1993.
The concentration of investments by the New Jersey Muni Portfolio in
New Jersey Municipal Obligations also raises special investment considerations.
The State of New Jersey generally has a diversified economic base consisting of,
among others, commerce and service industries, selective commercial agriculture,
insurance, tourism, petroleum refining and manufacturing, although New Jersey's
manufacturing industry has shown a downward trend in the last few years. New
Jersey is a major recipient of Federal assistance and, of all the states, is
among the highest in the amount of Federal aid received. Therefore, a decrease
in Federal financial assistance may adversely affect New Jersey's financial
condition. While New Jersey's economic base has become more diversified over
time and thus its economy appears to be less vulnerable during recessionary
periods, a recurrence of high levels of unemployment could adversely affect New
Jersey's overall economy and its ability to meet its financial obligations. In
addition, because New Jersey maintains a balanced budget which restricts total
appropriation increases to only 5% annually to any municipality or county, the
balanced budget plan may actually adversely affect a particular municipality's
or county's ability to repay its obligations.
See "Common Investment Policies and Risk Factors" for a description of
other investment policies.
INTERNATIONAL FIXED INCOME PORTFOLIO
The objective of the International Fixed Income Portfolio is to provide
maximum long-term total return consistent with reasonable risk to principal.
The International Fixed Income Portfolio seeks to achieve its objective by
investing primarily in non-dollar denominated fixed income securities. The
Portfolio will primarily invest in fixed income securities denominated in
foreign currencies, including the European Currency Unit ("ECU"), which are
issued by foreign governments and governmental agencies, and other agencies,
enterprises or instrumentalities sponsored by foreign governments. The Advisor
will seek opportunities for investment return in securities denominated in
currencies it believes to be undervalued. The Portfolio is expected to invest in
securities in a number of foreign countries, which may include but are not
limited to, Japan, the United Kingdom, Germany, France, Switzerland, the
Netherlands, Sweden, Australia, Hong Kong and Singapore. The Portfolio will
invest an aggregate of at least 65% of its total assets in the fixed income
securities of at least three countries other than the United States. The net
asset value of the Portfolio will fluctuate.
<PAGE>
The Portfolio may invest in the following securities: (i) debt
obligations issued or guaranteed by foreign national governments, their
agencies, instrumentalities, or political subdivisions (including any security
of an entity which is majority owned by such government, agency, instrumentality
or political subdivision) and (ii) debt securities issued or guaranteed by
supranational organizations established or supported by more than one national
government, including but not limited to, the World Bank, the European
Investment Bank, European Union and the Asian Development Bank. The Portfolio
may also invest in obligations of the U.S. Government and its guaranteed or
sponsored agencies, including shares of open-end or closed-end investment
companies which invest in such obligations exclusively (such shares will be
purchased within the limits prescribed by the 1940 Act); short-term money market
instruments issued in the U.S. or abroad, denominated in dollars or any foreign
currency, including short-term certificates of deposit (including variable rate
certificates of deposit), time deposits with a maturity no greater than 180
days, bankers acceptances, commercial paper rated A-1 by S&P or Prime-1 by
Moody's, or in equivalent money market securities; and other high quality fixed
income securities denominated in U.S. dollars, any foreign currency, or a
multi-national currency unit such as the ECU. The Portfolio invests in high
grade debt securities. The Portfolio's investments will consist of securities
rated at least AA by S&P or Aa by Moody's, or if unrated, securities which, in
the Advisor's opinion, are equivalent in credit quality to securities so rated.
The Portfolio may also invest in interest rate swaps, caps and floors. See
"Investment Objectives and Policies -- Interest Rate Transactions" in the SAI.
The International Fixed Income Portfolio may also enter into forward
foreign currency exchange contracts only in order to hedge against uncertainty
in the level of future foreign exchange rates in the purchase and sale of
investment securities; it may not enter into such contracts for speculative
purposes. A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts may be bought or sold to
protect the Portfolio, to some degree, against a possible loss resulting from an
adverse change in the relationship between foreign currencies and the U.S.
dollar. It should be realized that this method of protecting the value of the
Portfolio's investment securities against a decline in the value of a currency
does not eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange at some future point in time.
Additionally, although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time they tend to limit
any potential gain which might result should the value of such currency
increase.
The International Fixed Income Portfolio may utilize futures contracts,
options and options on futures contracts as a hedge against changes resulting
from market conditions and exchange rates in the values of the securities held
in that Portfolio of which it intends to purchase or if the Portfolio's
aggregate initial margins and premiums required in connection with new hedging
positions do not exceed 5% of its net asset value. The Portfolio would not
utilize futures contracts, options or options on futures contracts unless the
transactions are economically appropriate for the reduction of risks inherent in
the ongoing management of the Portfolio. The International Fixed Income
Portfolio may write covered calls (options on securities owned by the Portfolio)
and enter into closing purchase transactions with respect to such options. Also,
the Portfolio may enter into futures contracts and options on futures contracts
only to the extent that not more than 20% of the Portfolio's assets are invested
in such instruments. The International Fixed Income Portfolio may engage in
futures and options transactions only if it is consistent with its investment
objectives and policies.
Entering into futures contracts and trading options are highly
specialized activities which entail greater than ordinary investment risks. To
enter into a futures contract, the Portfolio must make a deposit of initial
margin with its custodian in a segregated account in the name of its futures
broker. Subsequent payments to or from the broker, called variation margin, will
be made on a daily basis as the price of the underlying security or index
fluctuates, making the long and short positions in the futures contracts more or
less valuable.
A call option for a particular security gives the purchaser of the
option the right to buy, and a writer the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligations under the option
contract. A put option for a particular security gives the purchaser the right
to sell the underlying security at the stated exercise price at any time prior
to the expiration date of the option, regardless of the market price of the
security. In contrast to an option on a particular security, an option on an
index provides the holder with the right to make or receive a cash settlement
upon exercise of the option. The amount of this settlement will be equal to the
difference between the closing price of the index at the time of exercise and
the exercise price of the option expressed in dollars, times a specified
multiple.
<PAGE>
The Portfolio may use over-the-counter bond options through any dealer
or dealer bank which the Advisor determines is creditworthy for outright
purchases and sales of securities. To the extent that over-the-counter bond
options are determined to be illiquid, the Portfolio will not purchase such
options if such purchase will cause the Portfolio's investments in all illiquid
securities to exceed 10% of its total assets.
The risks associated with the use of futures and options include: (i)
imperfect correlation between changes in the price of the securities being
hedged and the prices of futures and options relating to such securities; (ii)
possible lack of a liquid secondary market for a futures contract or option, and
the resulting inability to close a futures position which could have an adverse
impact on the Portfolio's ability to hedge, and (iii) losses due to
unanticipated market movements. The risk of loss in trading futures contracts in
some strategies can be substantial, due both to the low margin deposits
required, and the extremely high degree of leverage involved in futures pricing.
As a result, a relatively small price movement in a futures contract may result
in immediate and substantial loss or gain to the investor. Thus, a purchase or
sale of a futures contract may result in losses or gains in excess of the amount
invested in the contract. In contrast, purchasing options entails a risk of a
complete loss of the amounts paid as premiums to the writer of the options. In
addition, by writing a covered call option, the Portfolio forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price except insofar as the premium represents such
a profit. The Portfolio will not be able to sell the underlying security until
the covered call option expires or is exercised or the Portfolio effects a
closing purchase transaction by purchasing an option of the same series. For a
further discussion of futures contracts and options, see "Investment Objectives
and Policies -- Futures Contracts" in the SAI.
The Portfolio is classified as non-diversified under the 1940 Act.
Investment returns on a non-diversified portfolio typically are dependent upon
the performance of a smaller number of securities relative to the number held in
a diversified portfolio. Consequently, the change in value of any one security
may affect the overall value of a non-diversified portfolio more than it would a
diversified portfolio. Additionally, a non-diversified portfolio may be more
susceptible to economic, political and regulatory developments than a
diversified portfolio with a similar objective.
Because the Portfolio invests significantly in securities denominated
in foreign currencies, movements in foreign currency exchange rates versus the
U.S. dollar are likely to impact the Portfolio's share price stability relative
to domestic income funds. Fluctuation in foreign currencies can have a positive
or negative impact on returns. Normally, to the extent that the Portfolio
invested in foreign securities, a weakening in the U.S. dollar relative to the
foreign currencies underlying the Portfolio's investments should help increase
the net asset value of the Portfolio. Conversely, a strengthening in the U.S.
dollar versus the foreign currencies in which the Portfolio's securities are
denominated will generally lower the net asset value of the Portfolio. The
Advisor attempts to minimize exchange rate risk through active portfolio
management and efforts to identify risk from the Portfolio's holdings. Investors
should recognize that investing in the securities of foreign companies and the
utilization of forward foreign currency contracts involve special risks and
considerations not typically associated with investing in U.S. companies. These
risks and considerations include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign
portfolio transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment in foreign countries
and potential restrictions on the flow of international capital. Moreover, the
dividends payable on the Portfolio's foreign portfolio securities may be subject
to foreign withholding taxes, thus reducing the net amount of income available
for distribution to the Portfolio's shareholders. Further, foreign securities
often trade with less frequency and volume than domestic securities and,
therefore, may exhibit greater price volatility.
COMMON INVESTMENT POLICIES AND RISK FACTORS
There can be no assurance that any of the Portfolios will achieve its
stated investment objective. There are a number of investment policies common to
each of the Portfolios.
<PAGE>
REPURCHASE AGREEMENTS
Each Portfolio may enter into repurchase agreements with qualified
brokers, dealers, banks and other financial institutions deemed creditworthy by
the Advisor. Under normal circumstances, however, each of the Intermediate
Government, Muni Intermediate, New Jersey Muni and International Fixed Income
Portfolios will not enter into repurchase agreements if entering into such
agreements would cause, at the time of entering into such agreements, more than
20% of the value of the total assets of the particular Portfolio to be subject
to repurchase agreements. The International Fixed Income Portfolio would
generally enter into repurchase transactions to invest cash reserves.
In a repurchase agreement, a Portfolio purchases a security and
simultaneously commits to resell that security at a future date to the seller (a
qualified bank or securities dealer) at an agreed upon price plus an agreed upon
market rate of interest (itself unrelated to the coupon rate or date of maturity
of the purchased security). The securities held subject to a repurchase
agreement may have stated maturities exceeding 13 months, provided that with
respect to the Cash Portfolios, the repurchase agreement itself matures in less
than 13 months. The Advisor currently expects that repurchase agreements with
respect to the Intermediate Government, Muni Intermediate, New Jersey Muni and
International Fixed Income Portfolios also will mature in less than 13 months.
The seller under a repurchase agreement will be required to maintain the value
of the securities subject to the agreement at not less than 101% of the
repurchase price including accrued interest. The Funds' administrator will mark
to market daily the value of the securities purchased, and the Advisor will, if
necessary, require the seller to deposit additional securities to ensure that
the value is in compliance with the 101% requirement stated above. The Advisor
will consider the creditworthiness of a seller in determining whether a
Portfolio should enter into a repurchase agreement, and the Portfolios will only
enter into repurchase agreements with banks and dealers which are determined to
present minimal credit risk by the Advisor under procedures adopted by the Board
members.
In effect, by entering into a repurchase agreement, a Portfolio is
lending its funds to the seller at the agreed upon interest rate, and receiving
a security as collateral for the loan. Such agreements can be entered into for
periods of one day (overnight repo) or for a fixed term (term repo). Repurchase
agreements are a common way to earn interest income on short-term funds.
The use of repurchase agreements involves certain risks. For example,
if the seller of a repurchase agreement defaults on its obligation to repurchase
the underlying securities at a time when the value of these securities has
declined, a Portfolio may incur a loss upon disposition of them. Default by the
seller would also expose a Portfolio to possible loss because of delays in
connection with the disposition of the underlying obligations. If the seller of
an agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a bankruptcy court may determine that
the underlying securities are collateral not within the control of a Portfolio
and therefore subject to sale by the trustee in bankruptcy. Further, it is
possible that a Portfolio may not be able to substantiate its interest in the
underlying securities.
REVERSE REPURCHASE AGREEMENTS
The Government Cash and Intermediate Government Portfolios may enter
into reverse repurchase agreements. In a reverse repurchase agreement a
Portfolio sells a security and simultaneously commits to repurchase that
security at a future date from the buyer. In effect, the Portfolio is
temporarily borrowing funds at an agreed upon interest rate from the purchaser
of the security, and the sale of the security represents collateral for the
loan. The Portfolio retains record ownership of the security and the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Portfolio repurchases the security by remitting the proceeds
previously received, plus interest. In certain types of agreements, there is no
agreed upon repurchase date and interest payments are calculated daily, often
based on the prevailing overnight repurchase rate. These agreements, which are
treated as if reestablished each day, are expected to provide the Government
Cash Portfolio and the Intermediate Government Portfolio with a flexible
borrowing tool. Reverse repurchase agreements are considered to be borrowings by
a Portfolio under the 1940 Act.
A Portfolio's investment of the proceeds of a reverse repurchase
agreement is the speculative factor known as leverage. The Portfolio may enter
into a reverse repurchase agreement only if the interest income from investment
of the proceeds is greater than the interest expense of the transaction and the
proceeds are invested for a period no longer than the term of the agreement. A
Portfolio will maintain with the custodian a separate account with a segregated
portfolio of liquid securities at least equal to its purchase obligations under
these agreements. The Advisor will consider the creditworthiness of the other
party in determining whether a Portfolio will enter into a reverse repurchase
agreement.
<PAGE>
Under normal circumstances each of the Government Cash and Intermediate
Government Portfolios will not enter into reverse repurchase agreements if
entering into such agreements would cause, at the time of entering into such
agreements, more than 10% of the value of its total assets to be subject to such
agreements.
The use of reverse repurchase agreements involves certain risks. For
example, the other party to the agreement may default on its obligation or
become insolvent and unable to deliver the securities to the Portfolio at a time
when the value of the securities has increased. Reverse repurchase agreements
also involve the risk that a Portfolio may not be able to substantiate its
interest in the underlying securities.
BORROWING
Each Portfolio may purchase securities on a "when issued," "delayed
settlement" or "forward delivery" basis, and the Government Cash and
Intermediate Government Portfolios may enter into reverse repurchase agreements.
As a temporary measure for extraordinary or emergency purposes, a Portfolio may
borrow money from banks. However, none of the Portfolios will borrow money for
speculative purposes. See "Common Investment Policies--'When Issued,' 'Delayed
Settlement,' 'Forward Delivery Securities' and 'Reverse Repurchase
Agreements.'
"
LENDING OF SECURITIES
Each Portfolio may lend its portfolio securities with a value of up to
one-third of its total assets to qualified brokers, dealers, banks and other
financial institutions for the purpose of realizing additional net investment
income through the receipt of interest on the loan. Such loans would involve
risks of delay in receiving additional collateral in the event the value of the
collateral decreased below the value of the securities loaned or of delay in
recovering the securities loaned or even loss of rights in the collateral should
the borrower of the securities fail financially. Loans will be made only to
borrowers deemed by the Advisor to be of good standing.
MUNICIPAL OBLIGATIONS
The Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios
may each invest 25% or more of its net assets in Municipal Obligations, the
interest on which is paid solely from revenues of similar projects, and may
invest up to 20% of its total assets in private activity bonds when added
together with any taxable investments held by the Portfolio when, in the
opinion of the Advisor, the investment is warranted. To the extent a Portfolio's
assets are invested in Municipal Obligations payable from the revenues of
similar projects or are invested in private activity bonds, the particular
Portfolio will be subject to the peculiar risks presented by the laws and
economic conditions relating to such projects and bonds to a greater extent than
it would be if its assets were not so invested.
"WHEN ISSUED," "DELAYED SETTLEMENT" AND "FORWARD DELIVERY" SECURITIES
The Portfolios may purchase and sell securities on a "when issued,"
"delayed settlement" or "forward delivery" basis. "When issued" or "forward
delivery" refers to securities whose terms and indenture are available and for
which a market exists, but which are not available for immediate delivery. When
issued or forward delivery transactions may be expected to occur one month or
more before delivery is due. Delayed settlement is a term used to describe
settlement of a securities transaction in the secondary market which will occur
sometime in the future. No payment or delivery is made by a Portfolio in a when
issued, delayed settlement or forward delivery transaction until the Portfolio
receives payment or delivery from the other party to the transaction. A
Portfolio will maintain a separate account of cash, U.S. Government securities
or other high grade debt obligations at least equal to the value of purchase
commitments until payment is made. Such segregated securities will either mature
or, if necessary, be sold on or before the settlement date. Although a Portfolio
receives no income from the above described securities prior to delivery, the
market value of such securities is still subject to change. A Portfolio receives
no income from "when issued," "delayed settlement" or "forward delivery"
securities prior to delivery of such securities.
<PAGE>
A Portfolio will engage in when issued transactions to obtain what is
considered to be an advantageous price and yield at the time of the transaction.
When a Portfolio engages in when issued, delayed settlement or forward delivery
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of
speculation. Each Portfolio's when issued, delayed settlement and forward
delivery commitments are not expected to exceed 25% of its total assets absent
unusual market circumstances, and each Portfolio will only sell securities on
such a basis to offset securities purchased on such a basis.
INVESTMENT COMPANY SECURITIES
In connection with the management of their daily cash positions, the
Portfolios may each invest in securities issued by other open-end investment
companies with investment objectives and policies that are consistent with those
of the investing portfolio. Each Portfolio limits its investments so that, as
determined immediately after a securities purchase is made: (a) not more than 5%
of the value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in the securities of investment companies as a
group; and (c) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Portfolio. As a shareholder of another
investment company, the Portfolio would bear its pro rata portion of the other
investment company's advisory fees and other expenses, in addition to the
expenses the Portfolio bears directly in connection with its own operations.
ILLIQUID SECURITIES
No Portfolio will invest more than 10% of its net assets in securities
that are illiquid.
ELIGIBLE INSTRUMENTS--GOVERNMENT CASH AND INTERMEDIATE GOVERNMENT
PORTFOLIOS
During periods when federally chartered credit unions beneficially own
shares of the Government Cash and Intermediate Government Portfolios, those
Portfolios intend to observe limitations imposed under the National Credit Union
Administration Rules and Regulations ("NCUA Regulations") governing eligible
investments for federally chartered credit unions. Accordingly, during those
periods, unless the laws, rules or regulations governing eligible investments
for federally chartered credit unions are changed to permit such investments,
those Portfolios intend not to invest in, among other investments: Government
Trust Certificates; World Bank Obligations; securities of the Asian Development
Bank, the Inter-American Development Bank; the International Bank for
Reconstruction and Development; obligations of certain U.S. government
enterprises and instrumentalities investment in which is not provided for by the
Federal Credit Union Act; futures contracts; or options; and intend to observe
limitations imposed under NCUA Regulations on investment in certain types of
mortgage-related securities. With respect to collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"), the
Portfolios, in accordance with NCUA Regulations, will not invest in any CMO or
REMIC that does not pass the average life, average life sensitivity and price
sensitivity tests of the NCUA's "high-risk security" test, unless the purchase
is made solely to reduce interest rate risk or the instrument is subject to the
next sentence. The average life and average life sensitivity tests do not apply
to a floating or adjustable rate CMO or REMIC, irrespective of whether it has
been purchased to reduce interest rate risk, if (a) the interest rate is reset
at least annually, (b) the interest rate is below the contractual cap of the
instrument at the time of purchase or a subsequent testing date, (c) the index
upon which the interest rate is based is a widely-used market interest rate
index such as the London Interbank Offered Rate and (d) the interest rate of the
instrument varies directly (not inversely) with the index upon which it is based
and is not reset as a multiple of the change in the index.
Additionally, during periods when Massachusetts state-chartered credit
unions beneficially own shares of the Government Cash or Intermediate Government
Portfolios, those Portfolios intend to observe limitations imposed under
Massachusetts General Laws regarding eligible investments for Massachusetts
state-chartered credit unions. Accordingly, during those periods, unless the
laws governing eligible investments for Massachusetts state-chartered credit
unions are changed to permit such investments, those Portfolios intend not to
invest in obligations of certain U.S. Government agencies, enterprises and
instrumentalities such as the Student Loan Marketing Association, the investment
in which is not permitted under Massachusetts law.
<PAGE>
Unless specified above and except as described under "Investment
Limitations," the foregoing investment policies are not fundamental, and the
particular Funds' Board members may change such policies without shareholder
approval.
-----------------------
PURCHASE OF SHARES
Shares of each Portfolio are sold without a sales commission on a
continuous basis to the Advisor acting on behalf of its or an Affiliate's
clients ("Clients") and to other institutions (the "Institutions"), at the net
asset value per share next determined after receipt of the purchase order by the
transfer agent. See "Valuation of Shares." The minimum initial investment for
each Portfolio is $25,000; the minimum for subsequent investments for each
Portfolio is $1,000. Each Fund reserves the right to reduce or waive the minimum
initial and subsequent investment requirements from time to time. Beneficial
ownership of shares will be reflected on books maintained by the Advisor or the
Institutions. A prospective investor wishing to purchase shares in any of the
Funds should contact the Advisor or his or her Institution.
It is the responsibility of the Advisor to transmit orders for share
purchases to Investment Company Capital Corp. ("ICC"), the Funds' transfer
agent, and deliver required funds to The Chase Manhattan Bank, N.A., Brooklyn,
New York, the Funds' custodian, on a timely basis. Shares purchased in the Cash
Portfolios before 12:00 noon (Eastern time) begin earning dividends on the same
business day provided Federal funds are available to the particular Portfolio
before 12:00 noon (Eastern time) that day.
Each of the Funds reserves the right, in its sole discretion, to
suspend the offering of shares of its Portfolios or reject purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interests of the Fund.
Purchases of a Portfolio's shares will be made in full and fractional
shares of the Portfolio calculated to three decimal places. In the interest of
economy and convenience, certificates for shares will not be issued except upon
the written request of the shareholder. Certificates for fractional shares,
however, will not be issued.
REDEMPTION OF SHARES
Shares of each Portfolio may be redeemed at any time, without cost, at
the net asset value of the Portfolio next determined after receipt of the
redemption request by the transfer agent. Generally, a properly signed written
request is all that is required. Any redemption may be more or less than the
purchase price of the shares depending on the market value of the investment
securities held by the Portfolio. An investor wishing to redeem shares should
contact the Advisor or his or her Institution. It is the responsibility of the
Advisor to transmit promptly redemption orders to the transfer agent.
Payment of the redemption proceeds will ordinarily be made within one
business day, but in no event more than seven days, after receipt of the order
in proper form by the transfer agent. Redemption orders are effected at net
asset value per share next determined after receipt of the order in proper form
by the transfer agent. Each of the Funds may suspend the right of redemption
or postpone the date of payment at times when the New York Stock Exchange (the
"Exchange") is closed, or under any emergency circumstances as determined by the
Securities and Exchange Commission (the "Commission"). See "Valuation of Shares"
for the days on which the Exchange is closed.
If the particular Board determines that it would be detrimental to the
best interests of the remaining shareholders of the particular Fund to make
payment wholly or partly in cash, the Fund may pay the redemption proceeds in
whole or in part by a distribution in-kind of securities held by a Portfolio in
lieu of cash in conformity with applicable rules of the Commission. Investors
may incur brokerage charges on the sale of portfolio securities received as a
redemption in kind.
Each of the Funds reserves the right, upon 30 days' written notice,
to redeem an account in any of the Portfolios if the net asset value of the
account's shares falls below $100 and is not increased to at least such amount
within such 30-day period.
<PAGE>
VALUATION OF SHARES
The net asset value of the Portfolios is determined by dividing the
total market value of each Portfolio's investments and other assets, less any
liabilities of that Portfolio, by the total outstanding shares of that
Portfolio. For the Cash Portfolios, net asset value per share is determined as
of 12:00 noon (Eastern time) on each day that the Exchange is open for business
(an "Exchange Business Day"). Currently the Exchange is closed on weekends and
the customary national business holidays of New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day (or the days on which they are observed). For the Intermediate
Government, Muni Intermediate, New Jersey Muni and International Fixed Income
Portfolios, net asset value per share is determined as of the close of regular
trading hours of the Exchange on each Exchange Business Day on which the
Portfolio receives an order to purchase or redeem its shares. One or more
pricing services may be used to provide securities valuations in connection with
the determination of the net asset value of each Portfolio.
GOVERNMENT CASH AND TAX-EXEMPT CASH PORTFOLIOS
For the purpose of calculating each Cash Portfolio's net asset value
per share, securities are valued by the "amortized cost" method of valuation,
which does not take into account unrealized gains or losses. The amortized cost
method involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Portfolio would receive if it sold the instrument.
The use of amortized cost and the maintenance of each Portfolio's per
share net asset value at $1.00 is based on its election to operate under the
provisions of Rule 2a-7 under the 1940 Act. As a condition of operating under
that rule, each Cash Portfolio must maintain an average weighted maturity of 90
days or less, purchase only instruments deemed to have remaining maturities of
13 months or less, and invest only in securities which are determined by the
Advisor, pursuant to procedures established by the Board, to present minimal
credit risks and which are Eligible Securities, pursuant to procedures
established by the Board.
The Board has established procedures reasonably designed to stabilize
the net asset value per share for the purposes of sales and redemptions at
$1.00. These procedures include daily review of the relationship between the
amortized cost value per share and a net asset value per share based upon
available indications of market value.
In the event of a deviation of over 1/2 of 1% between a Cash
Portfolio's net asset value based upon available market quotations or market
equivalents and $1.00 per share based on amortized cost, the Board members will
promptly consider what action, if any, should be taken. The Board members will
also take such action as they deem appropriate to eliminate or to reduce to the
extent reasonably practicable any material dilution or other unfair results
which might arise from differences between the two. Such action may include
redemption in kind, selling instruments prior to maturity to realize capital
gains or losses or to shorten the average weighted maturity, exercising puts,
withholding dividends, paying distributions from capital or capital gains or
utilizing a net asset value per share as determined by using available market
quotations.
The net asset value per share of each Cash Portfolio will ordinarily
remain at $1.00, but each Cash Portfolio's daily dividends will vary in amount.
There can be no assurance, however, that the Cash Portfolios will maintain a
constant net asset value per share of $1.00.
INTERMEDIATE GOVERNMENT PORTFOLIO
Bonds and other fixed income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market, at the most recent quoted bid price, or when stock
exchange valuations are used, at the latest quoted sale price on the day of
valuation. If there is not such a reported sale, the latest quoted bid price
will be used. Net asset value includes interest on fixed income securities which
is accrued daily. In addition, bond and other fixed income securities may be
valued on the basis of prices provided by a pricing service when the Advisor
believes such prices reflect the fair market value of such securities. The
prices provided by a pricing service are determined without regard to bid or
last sale prices but take into account institutional size trading in similar
groups of securities and any developments related to specific securities. Debt
securities with remaining maturities of 60 days or less are valued at
amortized cost, pursuant to which (i) such securities shall be valued initially
at cost on the date of purchase or, in the case of securities purchased with
more than 60 days maturity, at their market or fair value on the 61st day prior
to maturity, and (ii) thereafter (absent unusual circumstances), a constant
proportionate amortization of any discount or premium shall be assumed until
maturity of the security.
<PAGE>
The value of other assets and securities for which no quotations are
readily available (including restricted securities) is determined in good faith
at fair value using methods determined by the Board.
MUNI INTERMEDIATE AND NEW JERSEY MUNI PORTFOLIOS
Municipal Obligations for which quotations are readily available are
valued at the most recent quoted bid price provided by investment dealers,
provided that Municipal Obligations may be valued on the basis of prices
provided by a pricing service when such prices are determined by the
administrator to reflect the fair market value of such Municipal Obligations.
Municipal Obligations for which market quotations are not readily available are
valued at fair market value as determined in good faith by or under the
direction of the particular Board. Debt obligations with remaining maturities of
60 days or less are valued on the basis of amortized cost, pursuant to which (i)
such securities are valued initially at cost on the date of purchase or, in the
case of securities purchased with more than 60 days maturity, at their market or
fair value on the 61st day prior to maturity, and (ii) thereafter (absent
unusual circumstances), a constant proportionate amortization of any discount or
premium shall be assumed until maturity of the security.
INTERNATIONAL FIXED INCOME PORTFOLIO
Bonds and other fixed income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market, at the most recent quoted bid price. Securities that
are primarily traded on U.S. or foreign exchanges (including securities traded
through the National Market System) are valued at the last quoted sale price on
the day of valuation. If there is no such reported sale, the latest quoted bid
price will be used. Net asset value includes interest on fixed income securities
which is accrued daily.
In addition, bond and other fixed income securities may be valued on
the basis of prices provided by a pricing service when the Advisor believes such
prices reflect the fair market value of such securities. The prices provided by
a pricing service are determined without regard to bid or last sale prices but
take into account institutional size trading in similar groups of securities and
any developments related to specific securities. Debt securities with remaining
maturities of 60 days or less are valued at amortized cost, pursuant to which
(i) such securities shall be valued initially at cost on the date of purchase
or, in the case of securities purchased with more than 60 days maturity, at
their market or fair value on the 61st day prior to maturity, and (ii)
thereafter (absent unusual circumstances), a constant proportionate amortization
of any discount or premium shall be assumed until maturity of the security.
The value of other assets and securities for which no quotations are
readily available (including restricted securities) is determined in good faith
at fair value using methods determined by the Board. Foreign currency amounts
are translated into U.S. dollars at the bid prices of such currencies against
U.S. dollars last quoted by a major bank.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolios have the following dividend and capital gains policies:
(a) The Cash Portfolios declare dividends daily and normally
distribute substantially all of their net investment income to
shareholders monthly.
(b) The International Fixed Income Portfolio normally distributes
substantially all of its net investment income to shareholders
in the form of a quarterly dividend.
(c) The Intermediate Government, Muni Intermediate and New Jersey
Muni Portfolios normally will distribute substantially all of
their net investment income to shareholders in the form of
monthly dividends.
<PAGE>
If any net capital gains are realized, the Portfolios normally
distribute such gains at least once a year. However, see "Dividends, Capital
Gains Distributions and Taxes--Federal Taxes--Miscellaneous," for a discussion
of the Federal excise tax applicable to certain regulated investment companies.
Undistributed net investment income is included in a Portfolio's net
assets for the purpose of calculating net asset value per share. Therefore, on
the Intermediate Government, Muni Intermediate, New Jersey Muni and
International Fixed Income Portfolios' "ex-dividend" date, the net asset value
per share excludes the dividend (i.e., is reduced by the per share amount of the
dividend). Dividends paid shortly after the purchase of shares of the
Intermediate Government, Muni Intermediate, New Jersey Muni and International
Fixed Income Portfolios by an investor, although in effect a return of capital,
are taxable to the investor.
FEDERAL TAXES
Each Portfolio intends to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). Such
qualification relieves a Portfolio of liability for Federal income taxes to the
extent its earnings are distributed in accordance with the Code.
Taxable Portfolios. Qualification as a regulated investment company
under the Code for a taxable year requires, among other things, that a taxable
Portfolio distribute to its shareholders an amount at least equal to 90% of its
investment company taxable income and 90% of its net exempt interest income (if
any) for such taxable year. In general, a Portfolio's investment company taxable
income will be its net investment income, including interest and dividends,
subject to certain adjustments, and net short-term capital gains and excluding
the excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. Each Portfolio intends to
distribute as dividends substantially all of its investment company taxable
income each year. Such dividends will be taxable as ordinary income to each
Portfolio's shareholders who are not currently exempt from Federal income taxes,
whether such income or gain is received in cash or reinvested in additional
shares. The dividends received deduction for corporations will apply to such
ordinary income distributions to the extent the total qualifying dividends
received by a Portfolio are from domestic corporations for the taxable year. It
is anticipated that none of the dividends paid by the Government Cash and
Intermediate Government Portfolios, and only a small part (if any) of the
dividends paid by the International Fixed Income Portfolio will be eligible for
the dividends received deduction.
Substantially all of each Portfolio's net realized long-term capital
gains, if any, will be distributed at least annually to its shareholders. A
Portfolio generally will have no tax liability with respect to such gains and
the distributions will be taxable to the shareholders who are not currently
exempt from Federal income taxes as long-term capital gains, regardless of how
long the shareholders have held the shares and whether such gains are received
in cash or reinvested in additional shares.
With respect to shares of the Intermediate Government, Muni
Intermediate, New Jersey Muni and International Fixed Income Portfolios, a
shareholder considering buying shares of a fund on or just before the record
date of a dividend should be aware that the amount of the forthcoming dividend
payment, although in effect a return of capital, will be taxable.
A taxable gain or loss may be realized by a shareholder upon redemption
or transfer of shares of the Intermediate Government, Muni Intermediate, New
Jersey Muni and International Fixed Income Portfolios, depending upon the tax
basis of such shares and their price at the time of redemption or transfer.
International Fixed Income Portfolio. It is expected that dividends and
certain interest income earned by the International Fixed Income Portfolio from
foreign securities will be subject to foreign withholding taxes or other taxes.
So long as more than 50% of the value of the Portfolio's total assets at the
close of any taxable year consists of stock or securities of foreign
corporations, the Portfolio may elect, for U.S. Federal income tax purposes, to
treat certain foreign taxes paid by it, including generally any withholding
taxes and other foreign income taxes, as paid by its shareholders. If the
Portfolio makes this election, the amount of such foreign taxes paid by the
Portfolio will be included in its shareholders' income pro rata (in addition to
taxable distributions actually received by them), and each shareholder will be
entitled (a) to credit his proportionate amount of such taxes against his U.S.
Federal income tax liabilities, or (b) if he itemizes his deductions, to deduct
such proportionate amount from his U.S. income.
Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios.
Exempt-interest dividends may be treated by shareholders as items of interest
excludable from their gross income under Section 103(a) of the Code, unless
under the circumstances applicable to the particular shareholder the exclusion
would be disallowed. (See "Additional Information Concerning Taxes" in the SAI.)
Distributions of net income may be taxable to investors under state or local law
as dividend income even though a substantial portion of such distributions may
be derived from interest on tax-exempt obligations which, if realized directly,
would be exempt from such income taxes.
<PAGE>
If the Portfolio should hold certain private activity bonds issued
after August 7, 1986, shareholders must include, as an item of tax preference,
the portion of dividends paid by a Portfolio that is attributable to interest on
such bonds in their Federal alternative minimum taxable income for purposes of
determining liability (if any) for the alternative minimum tax and the
environmental tax applicable to corporations. Corporate shareholders must also
take all exempt-interest dividends into account in determining certain
adjustments for Federal alternative minimum and environmental tax purposes. For
individuals, the alternative minimum tax rate is 26% for alternative minimum
taxable income in excess of an exemption amount and 28% for any amount of
alternative minimum taxable income in excess of the exemption amount plus
$175,000. For corporations, the alternative minimum tax rate is 20%. The
environmental tax applicable to corporations is imposed at the rate of .12% on
the excess of the corporation's modified Federal alternative minimum taxable
income over $2,000,000. Shareholders receiving Social Security benefits should
note that all exempt-interest dividends will be taken into account in
determining the taxability of such benefits.
To the extent that dividends paid to shareholders are derived from
taxable interest or from long-term or short-term capital gains, such dividends
will be subject to Federal income tax (whether such dividends are paid in cash
or additional shares) and may also be subject to state and local taxes.
Miscellaneous. Dividends declared in October, November or December of
any year payable to shareholders of record on a specified date in such months
will be deemed to have been received by the shareholders and paid by a Portfolio
on December 31, in the event such dividends are paid during January of the
following year.
A 4% nondeductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and net capital gain (excess of capital gains over
capital losses). Each Portfolio intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any net capital gain
prior to the end of each calendar year to avoid liability for this excise tax.
The foregoing summarizes some of the important tax considerations
generally affecting the Portfolios and their shareholders and is not intended as
a substitute for careful tax planning. Accordingly, potential investors in the
Portfolios should consult their tax advisers with specific reference to their
own tax situation.
The foregoing discussion of tax consequences is based on tax laws and
regulations in effect on the date of this Prospectus, which are subject to
change by legislative or administrative action.
Shareholders will be advised at least annually as to the federal income
tax consequences of distributions made each year.
Each Portfolio will be required in certain cases to withhold and remit
to the United States Treasury 31% of taxable dividends or gross proceeds
realized upon sale paid to shareholders who have failed to provide a correct tax
identification number in the manner required, who are subject to withholding
by the IRS for failure properly to include on their return payments of taxable
interest or dividends, or who have failed to certify to the Portfolio that they
are not subject to backup withholding when required to do so or that they are
"exempt recipients."
PENNSYLVANIA TAX CONSIDERATIONS
Shareholders of the Muni Intermediate Portfolio will not be subject to
Pennsylvania Personal Income Tax on distributions from the Portfolio
attributable to interest income from Pennsylvania Municipal Obligations held by
the Portfolio, either when received by the Portfolio or when credited or
distributed to the shareholders. The exemption from Pennsylvania Personal Income
Tax will also extend to interest on obligations of the United States, its
territories and certain of its agencies and instrumentalities ("Federal
Securities"). Shareholders of the Portfolio will not be subject to the
Philadelphia School District Net Income Tax imposed on Philadelphia residents on
distributions from the Portfolio attributable to interest income from
Pennsylvania Municipal Obligations or Federal Securities held by the Portfolio,
either when received by the Portfolio or when credited or distributed to the
shareholders.
<PAGE>
For purposes of the Pennsylvania Personal Income Tax and the School
District Tax, distributions derived from investments in other than Pennsylvania
Municipal Obligations and Federal Securities and distributions from net realized
capital gains in respect of such investments will be taxable. Distributions
qualifying as capital gain dividends for Federal income tax purposes are not
taxable for purposes of the School District Tax, unless the underlying asset was
held by the Portfolio for six months or less. Gain on the disposition of a share
of the Muni Intermediate Portfolio will be subject to the Pennsylvania Personal
Income Tax and the School District Tax, except that gain realized with respect
to a share held for more than six months is not subject to the School District
Tax.
Shareholders of the Muni Intermediate Portfolio are not subject to the
Pennsylvania personal property tax imposed by many counties in Pennsylvania to
the extent that the Portfolio is comprised of Pennsylvania Municipal Obligations
and Federal Securities.
NEW JERSEY TAX CONSIDERATIONS
It is anticipated that substantially all dividends paid by the New
Jersey Muni Portfolio will not be subject to New Jersey personal income tax. In
accordance with the provisions of New Jersey law as currently in effect,
distributions paid by a "qualified investment fund" will not be subject to the
New Jersey personal income tax to the extent that the distributions are
attributable to income received as interest or gain from New Jersey Municipal
Obligations, or as interest or gain from direct U.S. Government obligations.
Distributions by a qualified investment fund that are attributable to most other
sources will be subject to the New Jersey personal income tax. If the New Jersey
Muni Portfolio qualifies as a qualified investment fund under New Jersey law,
any gain on the redemption or sale of the Portfolio's shares will not be subject
to the New Jersey personal income tax. To be classified as a qualified
investment fund, at least 80% of the Portfolio's investment must consist of New
Jersey Municipal Obligations or direct U.S. Government obligations; it must have
no investments other than interest-bearing obligations, obligations issued at a
discount, and cash and cash items (including receivables); and it must satisfy
certain reporting obligations and provide certain information to its
shareholders. Shares of the Portfolio are not subject to property taxation by
New Jersey or its political subdivisions. To the extent that a shareholder is
subject to state or local taxes outside New Jersey, dividends earned by an
investment in the Fund may represent taxable income.
The New Jersey personal income tax is not applicable to corporations.
For all corporations subject to the New Jersey Corporation Business Tax,
dividend and distributions from a "qualified investment fund" are included in
the net income tax base for purposes of computing the Corporation Business Tax.
Furthermore, any gain upon the redemption or sale of Fund shares by a corporate
shareholder is also included in the net income tax base for purposes of
computing the Corporation Business Tax.
The foregoing is only a summary of certain New Jersey tax
considerations generally affecting the Portfolio and its shareholders, and is
not intended as a substitute for careful tax planning. Shareholders are urged to
consult their tax advisors with specific reference to their own tax situations.
OTHER STATE AND LOCAL TAXES
Shareholders may also be subject to state and local taxes on
distributions from the Funds. A shareholder should consult with his or her tax
adviser with respect to the tax status of distributions from the Funds in a
particular state and locality.
The Glenmede Fund has obtained a Certificate of Authority to do
business as a foreign corporation in Pennsylvania, and currently does business
in that state. Accordingly, the shares of the Glenmede Fund will be exempt from
Pennsylvania Personal Property Taxes.
INVESTMENT ADVISOR
The Advisor, a limited purpose trust company chartered in 1956,
provides fiduciary and investment services to endowment funds, foundations,
employee benefit plans and other institutions and individuals. The Advisor is a
wholly-owned subsidiary of The Glenmede Corporation and is located at One
Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103.
At November 30, 1995, the Advisor had over $8 billion in assets in the accounts
for which it serves in various capacities including as executor, trustee or
investment advisor.
Under Investment Advisory Agreements (the "Investment Advisory
Agreements") with the Funds, the Advisor, subject to the control and supervision
of the particular Fund's Board and in conformance with the stated investment
objective and policies of each Portfolio, manages the investment and
reinvestment of the assets of each Portfolio. It is the responsibility of the
Advisor to make investment decisions for the Portfolios and to place each
Portfolio's purchase and sales orders.
The Advisor does not receive any fee from the Funds for its investment
services provided to the Portfolios described in this Prospectus. However,
shareholders in the Funds who are clients of the Advisor or an Affiliate pay
fees which vary depending on the capacity in which the Advisor or the Affiliate
provides fiduciary and investment services to the particular client (e.g.,
personal trust, estate settlement, advisory and custodian services).
<PAGE>
Mary Ann B. Wirts, Vice President and Manager of the Fixed Income
Division of the Advisor, is the portfolio manager primarily responsible for the
management of the Tax-Exempt Cash Portfolio . Ms. Wirts has been primarily
responsible for the management of the Tax-Exempt Cash Portfolio since that
Portfolio commenced operations. Ms. Wirts has been employed by the Advisor since
1982.
Sheryl P. Durham, Vice President and Fixed Income Portfolio Manager of
the Advisor, is the portfolio manager primarily responsible for the management
of the Government Cash, Intermediate Government and International Fixed Income
Portfolios. Ms. Durham has been primarily responsible for the management of
those Portfolios since November 1989, November 1989 and August 1993,
respectively. Ms. Durham has been employed by the Advisor since 1989.
Laura LaRosa is the portfolio manager primarily responsible for the
management of the Muni Intermediate and New Jersey Muni Portfolios. Ms. LaRosa
has been primarily responsible for the management of those Portfolios since
November 1994. Prior to her employment with the Advisor, Ms. LaRosa was Vice
President of Institutional Sales at Hopper Soliday, Philadelphia from 1986
through October 1994. Ms. LaRosa has been employed by the Advisor since November
1994.
ADMINISTRATIVE, TRANSFER AGENCY AND DIVIDEND PAYING SERVICES
ICC serves as the Funds' administrator, transfer agent and dividend
paying agent pursuant to a Master Services Agreement, and in those capacities
supervises all aspects of the Funds' day-to-day operations, other than
management of the Funds' investments. ICC is a wholly-owned subsidiary of Alex.
Brown & Sons Incorporated ("Alex. Brown"). For its services as administrator,
transfer agent and dividend paying agent, ICC is entitled to receive fees from
the Funds equal to .12% of the first $100 million of the combined net assets
of the Funds; .08% of the next $150 million of the combined net assets of the
Funds; .04% of the next $500 million of the combined net assets of the Funds
and .03% of the combined net assets of the Funds over $750 million. For the
period July 1, 1995 to October 31, 1995, ICC received fees at the rate of _____%
(annualized) of the Government Cash Portfolio's average net assets, ____%
(annualized) of the Tax-Exempt Cash Portfolio's average net assets, ____%
(annualized) of the Muni Intermediate Portfolio's average net assets, ____%
(annualized) of the New Jersey Muni Portfolio's average net assets, ____%
(annualized) of the International Fixed Income Portfolio's average net assets.
For the period November 1, 1994 to June 30, 1995, the Fund's previous
administrator received fees at a rate of ____% (annualized) of the Government
Cash Portfolio's average net assets, ____% (annualized) of the Tax-Exempt Cash
Portfolio's average net assets, ____% (annualized) of the Intermediate
Government Portfolio's average net assets, ____% (annualized) of the Muni
Intermediate Portfolio's average net assets, ____% (annualized) of the New
Jersey Muni Portfolio's average net assets and ____% (annualized) of the
International Fixed Income Portfolio's average net assets.
SHAREHOLDER SERVICING PLAN
The Funds have each adopted a Shareholder Servicing Plan (the "Plan")
effective January 1, 1995 under which the Funds may pay a fee to broker/dealers,
banks and other financial institutions (including the Advisor and its
affiliates) that are dealers of record or holders of record or which have a
servicing relationship ("Servicing Agents") with the beneficial owners of shares
in any of the Portfolios. Under the Plan, Servicing Agents enter into
Shareholder Servicing Agreements (the "Agreements") with the Funds. Pursuant to
such Agreements, Servicing Agents provide shareholder support services to their
clients ("Customers") who beneficially own shares of the Portfolios. The fee,
which will be at an annual rate of .05%, is computed monthly and is based on the
average daily net assets of the shares beneficially owned by Customers of such
Servicing Agents. All expenses incurred by the Portfolios in connection with the
Agreements and the implementation of the Plans shall be borne entirely by the
holders of the shares of the particular Portfolio involved and will result in an
equivalent increase to each Portfolio's Total Annual Portfolio Operating
Expenses. The Advisor has entered into an Agreement with each Fund for each
Portfolio.
The services provided by the Servicing Agents under the Agreements may
include aggregating and processing purchase and redemption requests from
Customers and transmitting purchase and redemption orders to the transfer agent;
providing Customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; processing dividend
and distribution payments from the Funds on behalf of Customers; providing
information periodically to Customers showing their positions; arranging for
bank wires; responding to Customers' inquiries concerning their investments;
providing sub-accounting with respect to shares beneficially owned by Customers
or the information necessary for sub-accounting; if required by law, forwarding
shareholder communications (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
Customers; and providing such other similar services as may be reasonably
requested.
<PAGE>
INVESTMENT LIMITATIONS
Each Portfolio will not:
(a) purchase more than 10% of any class of the outstanding voting
securities of any issuer;
(b) acquire any securities of companies within one industry if, as a
result of such acquisition, more than 25% of the value of the
Portfolio's total assets would be invested in securities of
companies within such industry; provided, however, that there
shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. Government, its agencies, enterprises or
instrumentalities;
(c) pledge, mortgage, or hypothecate any of its assets to an extent
greater than 10% of its total assets at fair market value, except
as described in this Prospectus and the Statement of Additional
Information and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in
connection with the writing of covered put and call options and
the purchase of securities on a when issued, delayed settlement or
forward delivery basis and collateral arrangements with respect to
initial or variation margin for futures contracts will not be
deemed to be pledges of a Portfolio's assets or the purchase of
any securities on margin for purposes of this investment
limitation;
(d) issue senior securities except that a Portfolio may borrow money
in accordance with investment limitation (e), purchase securities
on a when issued, delayed settlement or forward delivery basis and
enter into reverse repurchase agreements; and
(e) borrow money except as a temporary measure for extraordinary or
emergency purposes, and then not in excess of 10% of its total
assets at the time of borrowing (entering into reverse repurchase
agreements and purchasing securities on a when issued, delayed
settlement or forward delivery basis are not subject to this
investment limitation).
Each Portfolio, with the exceptions of the Muni Intermediate, New
Jersey Muni and International Fixed Income Portfolios, also will not:
(a) with respect to 75% of its total assets, invest more than 5% of
its total assets at the time of purchase in the securities of any
single issuer (other than obligations issued or guaranteed by the
U.S. Government, its agencies, enterprises or instrumentalities).
Each of the Muni Intermediate, New Jersey Muni and International Fixed
Income Portfolios is classified as a "non-diversified" investment company under
the 1940 Act, which means that each Portfolio is not limited by the 1940 Act in
the proportion of its assets that it may invest in the securities of a single
issuer. However, each Portfolio intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Internal Revenue
Code of 1986, as amended, which generally will relieve the Portfolio of any
liability for federal income tax to the extent its earnings are distributed to
shareholders. In order to qualify as a regulated investment company for federal
income tax purposes, each Portfolio will limit its investments and at the close
of each quarter of the taxable year will not, with respect to 50% of its total
assets, invest more than 5% of its total assets at the time of purchase in the
securities of any single issuer (other than obligations issued or guaranteed by
the U.S. Government, its agencies, enterprises or instrumentalities).
<PAGE>
If a percentage restriction for a Portfolio is adhered to at the time
an investment is made, a later increase in percentage resulting from a change in
value or assets will not constitute a violation of such restriction. If a
Portfolio's borrowings are in excess of 5% (excluding overdrafts) of its total
net assets, additional portfolio purchases will not be made until the amount of
such borrowing is reduced to 5% or less.
The investment limitations described here and in the SAI are
fundamental policies of the Portfolios and may be changed only with the approval
of the holders of a majority of the outstanding shares (as defined in the 1940
Act) of the affected Portfolio. In order to permit the sale of shares in certain
states, each of the Funds may make commitments more restrictive than the
investment policies and limitations described in this Prospectus and the SAI.
Should a Fund determine that any such commitment is no longer in the best
interest of the Fund, it will revoke the commitment by terminating sales of its
shares in the state involved.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
Glenmede Fund was organized as a Maryland corporation on June 30, 1988.
Glenmede Fund's Articles of Incorporation authorize the Board members to issue
2,500,000,000 shares of common stock, with a $.001 par value. The Board has the
power to designate one or more classes ("Portfolios") of shares of common stock
and to classify or reclassify any unissued shares with respect to such
Portfolios. Currently, Glenmede Fund is offering shares of ten Portfolios.
Glenmede Portfolios was organized as a Massachusetts business trust on
March 3, 1992. Glenmede Portfolio's Master Trust Agreement authorizes the
Glenmede Portfolios' Board to issue an unlimited number of shares of beneficial
interest with a $.001 par value. The Glenmede Portfolios' Board has the power to
designate one or more series (Sub-Trusts) of shares of beneficial interest and
to classify or reclassify any unissued shares with respect to such Sub-Trusts.
Currently, the Glenmede Portfolios is offering shares of two Sub-Trusts, the
Muni Intermediate and New Jersey Muni Portfolios.
The shares of each Portfolio have no preference as to conversion,
exchange, dividends, retirement or other rights, and, when issued and paid for
as provided in this Prospectus, will be fully paid and non-assessable. The
shares of each Portfolio have no pre-emptive rights and do not have cumulative
voting rights, which means that the holders of more than 50% of the shares of a
Fund voting for the election of its Board members can elect 100% of the Board of
that Fund if they choose to do so. A shareholder is entitled to one vote for
each full share held (and a fractional vote for each fractional share held),
then standing in his or her name on the books of the particular Fund. The Funds
will not hold annual meetings of Shareholders except as required by the 1940
Act, the next sentence and other applicable law. Each Fund has undertaken that
its Board will call a meeting of shareholders for the purpose of voting upon the
question of removal of a Board member or members if such a meeting is requested
in writing by the holders of not less than 10% of the outstanding shares of the
particular Fund. To the extent required by the undertaking, the particular Fund
will assist shareholder communication in such matters. The Securities and
Exchange Commission staff has expressed the view that the use of this combined
Prospectus for the Funds may subject a Fund to liability for misstatements,
inaccuracies or incomplete disclosure about the other Fund.
At November 30, 1995, the Advisor was the record owner of 100% of the
outstanding shares of each Portfolio.
DISTRIBUTOR
Armata Financial Corp. ("Armata"), located at 135 East Baltimore
Street, Baltimore, Maryland 21202, serves as the Funds' distributor. Armata is a
subsidiary of Alex. Brown.
<PAGE>
CUSTODIAN
The Chase Manhattan Bank, N.A., Brooklyn, New York, serves as the
custodian of the Funds' respective assets.
TRANSFER AGENT
ICC, located at 135 East Baltimore Street, Baltimore, Maryland 21202,
acts as the Funds' transfer agent.
INDEPENDENT ACCOUNTANTS
_______________, Philadelphia, Pennsylvania, serves as independent
accountants for the Fund and will audit its financial statements annually.
REPORTS
Shareholders receive unaudited semi-annual financial statements and
audited annual financial statements.
COUNSEL
Drinker Biddle & Reath, Philadelphia, Pennsylvania, serves as counsel
to the Funds.
BOARD MEMBERS AND OFFICERS
The business and affairs of each Fund are managed under the direction
of its Board. The following is a list of the Board members and officers of each
Fund and a brief statement of their principal occupations during the past five
years:
<PAGE>
<TABLE>
<CAPTION>
Name and Address Age Principal Occupation During Past Five Years
- ------------------------ --- ---------------------------------------------------
<S> <C> <C>
H. Franklin Allen, Ph.D. 38 Director/Trustee of the Funds; Professor of Finance and
The Wharton School of The Economics, Vice Dean and Director of Wharton Doctoral
University of Pennsylvania Programs; Associate Professor of Finance and Economics;
2300 Steinberg Hall-Dietrich Hall Associate Professor of Finance. He has been employed by The
Philadelphia, PA 19104-6302 University of Pennsylvania since 1985.
Willard S. Boothby, Jr. 73 Director/Trustee of the Funds; Director, Penn Engineering &
600 East Gravers Lane Manufacturing Corp.; Former Director of Georgia-Pacific
Wyndmoor, PA 19118 Corp. ; formerly Managing Director of PaineWebber, Inc.
John W. Church, Jr.* 62 Chairman, President and Director/Trustee of the Funds; Senior
One Liberty Place Vice President and Chief Investment Officer of The Glenmede
1650 Market Street, Suite 1200 Trust Company. He has been employed by The Glenmede
Philadelphia, PA 19103 Trust Company since 1979.
Francis J. Palamara 69 Director/Trustee of the Funds; Trustee of Gintel Fund and
P.O. Box 44024 Gintel ERISA Fund; Director, XTRA Corporation and
Phoenix, AZ 85064-4024 Central Tractor, Farm and Country, Inc.; Former Executive
Vice President--Finance of ARA Services, Inc.
G. Thompson Pew, Jr.* 53 Director/Trustee of the Funds; Former Director of Brown &
310 Caversham Road Glenmede Holdings, Inc.; Co-Founder, Director, Principal and
Bryn Mawr, PA 19010 Officer of Philadelphia Investment Banking Co.; Director and
Officer of Valley Forge Administrative Services Company.
Mary Ann B. Wirts 44 Executive Vice President of the Funds; Vice President and
One Liberty Place Manager of the Fixed Income Division of The Glenmede Trust
1650 Market Street, Suite 1200 Company. She has been employed by The Glenmede Trust
Philadelphia, PA 19103 Company since 1982.
Sheryl P. Durham, CFA 37 Vice President of the Funds; Vice President of The Glenmede
One Liberty Place Trust Company and a Fixed Income Portfolio Manager at The
1650 Market Street, Suite 1200 Glenmede Trust Company since 1989.
Philadelphia, PA 19103
Kimberly C. Osborne 30 Vice President of the Funds; Assistant Vice President of The
One Liberty Place Glenmede Trust Company. She has been employed by The
1650 Market Street, Suite 1200 Glenmede Trust Company since 1993. From 1992-1993 she
Philadelphia, PA 19103 was a Client Service Manager with Mutual Funds Service
Company and from 1987-1992, she was a Client Administrator with
The Vanguard Group, Inc.
Michael P. Malloy 36 Secretary of the Funds; Partner in the law firm of Drinker
Philadelphia National Bank Building Biddle & Reath.
1345 Chestnut Street
Philadelphia, PA 19107-3496
Brian C. Nelson 36 Assistant Secretary of the Funds; Vice President, Alex.
135 East Baltimore Street Brown, ICC and Armata.
Baltimore, MD 21202
Joseph A. Finelli 38 Treasurer of the Funds. He has been a Vice President of
135 East Baltimore Street Alex. Brown since September 1995. Prior thereto, he was
Baltimore, MD 21202 Vice President and Treasurer of Delaware Group.
</TABLE>
- ------------
* Board members Church and Pew are "interested persons" of the Funds as that
term is defined in the 1940 Act.
For additional information concerning remuneration of Board members
see "Management of the Funds" in the SAI.
--------------------------------------------
Shareholder inquiries should be addressed to the Funds at the address
or telephone number stated on the cover page.
<PAGE>
THE GLENMEDE FUND, INC.
THE GLENMEDE PORTFOLIOS
135 East Baltimore Street, Baltimore, Maryland 21202
===============================================================================
Prospectus
Dated February __, 1996
Investment Advisor Administrator and Transfer Agent
The Glenmede Trust Company Investment Company Capital Corp.
One Liberty Place 135 East Baltimore Street
1650 Market Street, Suite 1200 Baltimore, Maryland 21202
Philadelphia, PA 19103
Distributor
Armata Financial Corp.
135 East Baltimore Street
Baltimore, Maryland 21202
- -------------------------------------------------------------------------------
Table of Contents
Page
----
Expenses of the Portfolios..................
Financial Highlights........................
Performance Calculations....................
Investment Policies and Risk Factors........
Common Investment Policies and
Risk Factors..............................
Purchase of Shares..........................
Redemption of Shares........................
Valuation of Shares.........................
Dividends, Capital Gains Distributions
and Taxes.................................
Investment Advisor..........................
Administrative, Transfer Agency and
Dividend Paying Services....................
Shareholder Servicing Plan..................
Investment Limitations......................
General Information.........................
Board Members and Officers..................
No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the Funds' Statement of
Additional Information, in connection with the offering made by this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Funds or their Distributor. This
Prospectus does not constitute an offering by the Funds or the Distributor in
any jurisdiction in which such offering may not lawfully be made.
<PAGE>
THE GLENMEDE FUND, INC.
THE GLENMEDE PORTFOLIOS
(800) 442-8299
STATEMENT OF ADDITIONAL INFORMATION
February __, 1996
This Statement of Additional Information is not a prospectus but should
be read in conjunction with The Glenmede Fund, Inc.'s ("Glenmede Fund") and The
Glenmede Portfolios' ("Glenmede Portfolios" and collectively with Glenmede Fund,
the "Funds") Prospectuses dated February __, 1996 (the "Prospectuses"). To
obtain any of the Prospectuses, please call the Funds at the above telephone
number.
Capitalized terms used in this Statement of Additional Information and
not otherwise defined have the same meanings given to them in the Funds'
Prospectuses.
Table of Contents
Page
INVESTMENT OBJECTIVES AND POLICIES.........................................
PURCHASE OF SHARES.........................................................
REDEMPTION OF SHARES.......................................................
SHAREHOLDER SERVICES.......................................................
PORTFOLIO TURNOVER.........................................................
INVESTMENT LIMITATIONS.....................................................
MANAGEMENT OF THE FUNDS....................................................
INVESTMENT ADVISORY AND OTHER SERVICES.....................................
DISTRIBUTOR................................................................
EXPENSES...................................................................
PORTFOLIO TRANSACTIONS.....................................................
ADDITIONAL INFORMATION CONCERNING TAXES....................................
PERFORMANCE CALCULATIONS...................................................
GENERAL INFORMATION........................................................
FINANCIAL STATEMENTS.......................................................
APPENDIX -- DESCRIPTION OF SECURITIES AND RATINGS..........................
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement the investment objectives and
policies set forth in the Funds' Prospectuses:
Repurchase Agreements
Repurchase agreements that do not provide for payment to a Portfolio
within seven days after notice without taking a reduced price are considered
illiquid securities.
Futures Contracts
Even though the following hedging instruments are not currently used by
the International Fixed Income Portfolio, this Portfolio may, where appropriate,
enter into futures contracts, options, and options on futures contracts for the
purpose of hedging. Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of a specific security at a
specified future time and at a specified price. Futures contracts which are
standardized as to maturity date and underlying financial instrument are traded
on national futures exchanges. Futures exchanges and trading are regulated under
the Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC").
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Futures contracts are customarily purchased and sold on
margin that may range upward from less than 5% of the value of the contract
being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The
International Fixed Income Portfolio expects to earn interest income on its
margin deposits.
<PAGE>
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
interest rates. The International Fixed Income Portfolio intends to use futures
contracts only for hedging purposes.
Regulations of the CFTC applicable to the International Fixed Income
Portfolio require that all of its futures transactions either constitute bona
fide hedging transactions or that the Portfolio's aggregate initial margins
and premiums required in connection with new hedging positions do not exceed 5%
of its net asset value. The International Fixed Income Portfolio will only sell
futures contracts to protect securities it owns against price declines or
purchase contracts to protect against an increase in the price of securities it
intends to purchase.
Although techniques other than the sale and purchase of futures
contracts could be used to control the International Fixed Income Portfolio's
exposure to market fluctuations, the use of futures contracts may be a more
effective means of hedging this exposure. The International Fixed Income
Portfolio would incur commission expenses in both opening and closing out
futures positions.
Restrictions on the Use of Futures Contracts. The International Fixed
Income Portfolio will not enter into futures contract transactions to the extent
that, immediately thereafter, the sum of the Portfolio's initial margin deposits
on open contracts exceeds 5% of the market value of its total assets. In
addition, the International Fixed Income Portfolio will not enter into futures
contracts to the extent that the Portfolio's outstanding obligations to purchase
securities under these contracts would exceed 20% of its total assets.
<PAGE>
Risk Factors in Futures Transactions. Positions in futures contracts
may be closed out only on an exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the International Fixed Income Portfolio would continue to be
required to make daily cash payments to maintain its required margin. In such
situations, if the Portfolio has insufficient cash, it may have to sell
portfolio securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the International Fixed Income Portfolio
may be required to make delivery of the instruments underlying futures contracts
it holds. The inability to close options and futures positions also could have
an adverse impact on the International Fixed Income Portfolio's ability to
effectively hedge.
The International Fixed Income Portfolio will attempt to minimize the
risk that it will be unable to close out a futures contract by only entering
into futures which are traded on national futures exchanges and for which there
appears to be a liquid secondary market. There can be no assurance, however,
that a liquid secondary market will exist for a particular futures contract at
any given time.
Successful use of futures by the International Fixed Income Portfolio
also is subject to the Advisor's ability to predict correctly movements in the
direction of the market. For example, if the Portfolio has hedged against the
possibility of a decline in the market adversely affecting securities held by it
and securities prices increase instead, the Portfolio will lose part or all of
the benefit to the increased value of its securities which it has hedged because
it will have approximately equal offsetting losses in its futures positions. In
addition, in some situations, if the International Fixed Income Portfolio has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may be, but will not necessarily be, at
increased prices which reflect the rising market. The International Fixed Income
Portfolio may have to sell securities at a time when it may be disadvantageous
to do so.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit, before any deduction for the
transaction costs, if the contract were closed out. Thus, a purchase or sale of
a futures contract may result in losses in excess of the amount invested in the
contract.
<PAGE>
Utilization of futures transactions by the International Fixed Income
Portfolio involves the risk of imperfect or no correlation where the securities
underlying futures contracts have different maturities than the portfolio
securities being hedged. It is also possible that the International Fixed Income
Portfolio could both lose money on futures contracts and also experience a
decline in value of its portfolio securities. There is also the risk of loss by
the International Fixed Income Portfolio of margin deposits in the event of
bankruptcy of a broker with whom the Portfolio has an open position in a futures
contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
The trading of futures contracts is also subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Forward Foreign Exchange Contracts
A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract as agreed by the parties, at a
price set at the time of the contract. In the case of a cancelable forward
contract, the holder has the unilateral right to cancel the contract at maturity
by paying a specified fee. The contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A foreign currency futures
contract is a standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at the time of the
contract. Foreign currency futures contracts traded in the United States are
designed by and traded on exchanges regulated by the CFTC such as the New York
Mercantile Exchange. A Portfolio would enter into foreign currency futures
contracts solely for hedging or other appropriate investment purposes as defined
in CFTC regulations.
<PAGE>
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity date
of a forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in any
given month. Forward contracts may be in any amounts agreed upon by the parties
rather than predetermined amounts. Also, forward foreign exchange contracts are
traded directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward contract, a Portfolio may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract.
Options
Investments in options involve some of the same considerations that are
involved in connection with investments in futures contracts (e.g., the
existence of a liquid secondary market). In addition, the purchase of an option
also entails the risk that changes in the value of the underlying security or
contract will not be fully reflected in the value of the option purchased.
Depending on the pricing of the option compared to either the futures contract
upon which it is based, or upon the price of the securities being hedged, an
option may or may not be less risky than ownership of the futures contract or
such securities. In general, the market prices of options can be expected to be
more volatile than the market prices on the underlying futures contract or
securities. Over-the-counter options are considered illiquid. The International
Fixed Income Portfolio may enter into options only if not more than 5% of the
Portfolio's assets are required as premiums.
<PAGE>
Fixed Income Options
Call and Put Options. The International Fixed Income Portfolio will
write call options and put options on a covered or secured basis only, and will
not engage in option writing strategies for speculative purposes. The Portfolio
may write covered call options and secured put options from time to time on such
portion of its portfolio, without limit, as the Advisor determines is
appropriate in seeking to obtain the Portfolio's investment objective. The
Portfolio may also purchase call options and invest up to 20% of its total
assets in the purchase of put options if, at the time of such purchase, the
Portfolio owns the security covered by such put option.
Covered Call Writing. A call option gives the purchaser of the option
the right to buy, and the writer has the obligation to sell, the underlying
security at the stated exercise price during the option period. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity for capital appreciation above the exercise
price should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security decline.
The International Fixed Income Portfolio will write call options only
on a covered basis, which means that the Portfolio owns or has the right to
acquire the underlying security subject to a call option at all times during the
option period. Options written by the Portfolio will normally have expiration
dates between three and nine months from the date written. The exercise price of
a call option may be below, equal to or above the market value of the underlying
security at the time the option is written.
During the option period, a covered call option writer may be required
at any time to deliver the underlying security against payment of the exercise
price. This obligation is terminated upon the expiration of the option period or
at such earlier time in which the writer effects a closing purchase transaction.
A closing purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice.
Closing purchase transactions are ordinarily effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
International Fixed Income Portfolio to write another call option on the
underlying security with either a different exercise price or expiration date or
both. The Portfolio may realize a net gain or loss from a closing purchase
transaction depending upon whether the amount of the premium received on the
call option is more or less than the cost of effecting the closing purchase
transaction. Any loss incurred in a closing purchase transaction may be wholly
or partially offset by unrealized appreciation in the market value of the
underlying security. Conversely, a gain resulting from a closing purchase
transaction, or upon expiration of an unexercised option, could be offset in
whole or in part or exceeded by a decline in the market value of the underlying
security. If a call option is exercised, the Portfolio realizes a gain or loss
from the sale of the underlying security equal to the difference between the
cost of the underlying security and the proceeds of the sale of the security
plus the premium received for the option less the commission paid.
<PAGE>
The value of a call option generally reflects the market price of the
underlying security. Other principal factors affecting the value include supply
and demand, interest rates, the price volatility of the underlying security and
the time remaining until the expiration date.
Secured Put Writing. A put option gives the purchaser of the option the
right to sell, and the writer has the obligation to buy, the underlying security
at the stated exercise price during the option period. The put writer assumes
the risk of loss should the market value of the underlying security decline
below the exercise price of the option. During the option period the writer of a
put option may be required at any time to make payment of the exercise price
against delivery of the underlying security. The operation of put options in
other respects is substantially identical to that of call options.
The International Fixed Income Portfolio will write put options only on
a secured basis, which means that the Portfolio will maintain in a segregated
account with the custodian cash or securities in an amount not less than the
exercise price of the option at all times during the option period. The
Portfolio will generally write secured put options when it wishes to purchase
the underlying security at a price lower than the current market price of the
security. In such event the Portfolio would write a secured put option at an
exercise price which, reduced by the premium received on the option, reflects
the lower price it is willing to pay. The potential gain on a secured put option
is limited to the premium received on the option (less the commissions paid on
the transaction) while the potential loss equals the difference between the
exercise price of the option and the market price of the underlying securities
when the put is exercised, offset by the premium received (less the commissions
paid on the transaction).
Purchasing Call Options. The International Fixed Income Portfolio may
purchase call options only (i) in a closing purchase transaction as described
under "Options -- Fixed Income Options -- Covered Call Writing," (ii) to offset
its obligation under an over-the-counter option which it has written, or (iii)
to offset the convexity risk of futures contracts. The option purchased in an
offsetting transaction could be either a listed or over-the-counter option on
the same securities and having the same terms as the outstanding option. An
offsetting over-the-counter option generally would be acquired from a dealer or
financial institution other than the holder of the over-the-counter option
written by the Portfolio. The purchased option would be exercised or closed out
prior to or at the same time as the option written.
<PAGE>
Purchasing Put Options. The International Fixed Income Portfolio may
invest up to 20% of its total assets in the purchase of put options on
securities. At all times during which it holds a put option, the Portfolio is
required to own or have the right to acquire the security covered by such
option.
The Portfolio may purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ("protective puts"). The authority to
purchase put options allows the Portfolio to protect unrealized gain in an
appreciated security in its portfolio without actually selling the security. The
Portfolio may sell a put option which it has previously purchased prior to the
sale of the securities underlying such option. Such a sale would result in a net
gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put option which
is sold. Any such gain or loss could be offset in whole or part by a change in
the market value of the underlying security. If a put option purchased by the
Portfolio expired without being sold or exercised, the premium would be lost.
Options on Interest Rate Futures Contracts. The International Fixed
Income Portfolio may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing transactions
with respect to such options to terminate an existing position. The writer of an
option on a futures contract is required to deposit initial and variation margin
pursuant to requirements similar to those applicable to futures contracts.
Premiums received from the writing of an option are included in initial margin
deposits. An option on a futures contract gives the purchaser the right, and the
writer the obligation, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified exercise price at any time during the
term of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option is accompanied
by delivery of the accumulated balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract at
the time of exercise exceeds, in the case of a call, or is less than, in the
case of a put, the exercise price of the option on the futures contract.
The Portfolio may use options on futures contracts in connection with
hedging strategies. Generally, these strategies are employed in a similar manner
and under the same market conditions in which the Portfolio may use put and call
options on securities.
<PAGE>
While hedging can provide protection against an adverse movement in
interest rates, it can also preclude a hedger's opportunity to benefit from a
favorable interest rate movement. In addition, investing in futures contracts
and options on futures contracts causes the Portfolio to incur additional
brokerage commissions, and may cause an increase in the Portfolio's portfolio
turnover rate.
Miscellaneous. The International Fixed Income Portfolio may write or
purchase options which are listed on an exchange as well as options which are
traded over-the-counter.
The Portfolio may close out its position as writer of an option only if
a liquid secondary market exists for options of that series, but there is no
assurance that such a market will exist, particularly in the case of
over-the-counter options, which can be closed out only with the other party to
the transaction. The Portfolio may be able to purchase an offsetting option
which does not close out its position as a writer but constitutes an asset of
equal value to the obligation under the option written. If the Portfolio is not
able to enter into a closing purchase transaction or to purchase an offsetting
position, it will be required to maintain the securities subject to the call, or
the collateral underlying the put, even though it might not be advantageous to
do so, until a closing transaction can be entered into (or the option is
exercised or expires).
Securities Lending.
Each Portfolio may lend its investment securities to qualified
institutional investors who need to borrow securities in order to complete
certain transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. By lending its investment
securities, a Portfolio attempts to increase its income through the receipt of
interest on the loan. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Portfolio. Each Portfolio may lend its investment securities to qualified
brokers, dealers, domestic and foreign banks or other financial institutions, so
long as the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940 (the "1940 Act") or the
rules and regulations or interpretations of the Securities and Exchange
Commission (the "Commission") thereunder. The Company may, from time to time,
pay negotiated fees in connection with the lending of securities.
<PAGE>
Interest Rate Transactions
The International Fixed Income Portfolio may enter into interest rate
swaps and the purchase or sale of related caps and floors transactions. The
Portfolio expects to enter into these transactions primarily to preserve a
return or spread on a particular investment or a portion of its portfolio, to
protect against currency fluctuations, as a duration management technique or to
protect against any increase in the price of securities the Portfolio
anticipates purchasing at a later date. The Portfolio intends to use these
transactions as hedges and not as speculative investments and will not sell
interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Portfolio may be obligated to pay.
Interest rate swaps involve the exchange by the Portfolio with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal. A currency swap is an agreement to exchange cash flows on a
notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount.
The Portfolio will usually enter into swaps on a net basis, i.e., the
two payment streams are netted out in a cash settlement on the payment date or
dates specified in the instrument, with the Portfolio receiving or paying, as
the case may be, only the net amount of the two payments. Inasmuch as these
swaps, caps or floors are entered into in good faith for hedging purposes, the
Advisor and the Portfolio believe such obligations do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to its borrowing restrictions. The Portfolio will not enter into any
swap, cap or floor transaction unless, at the time of entering into such
transaction, the unsecured long-term debt of the counterparty, combined with any
credit enhancements, is rated at least "A" by S&P or Moody's or has an
equivalent rating from an NRSRO or is determined to be of equivalent credit
quality by the Advisor. If there is a default by the counterparty, the Portfolio
may have contractual remedies pursuant to the agreements related to the
transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps and floors are more recent innovations
for which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.
With respect to swaps, the Portfolio will accrue the net amount of the
excess, if any, of its obligations over its entitlements with respect to each
swap on a daily basis and will segregate an amount of cash or liquid high grade
securities having a value equal to the accrued excess. Caps and floors require
segregation of assets with a value equal to the Portfolio's net obligation, if
any.
<PAGE>
PURCHASE OF SHARES
The purchase price of shares of each Portfolio is the net asset value
next determined after receipt of the purchase order by the particular Fund.
Each Portfolio reserves the right in its sole discretion (i) to suspend
the offering of its shares, (ii) to reject purchase orders when in the judgment
of management such rejection is in the best interest of the particular Fund, and
(iii) to reduce or waive the minimum for initial and subsequent investments from
time to time.
REDEMPTION OF SHARES
Each Portfolio may suspend redemption privileges or postpone the date
of payment (i) during any period that the Exchange is closed, or trading on the
Exchange is restricted as determined by the Commission, (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Portfolio to dispose of
securities owned by it, or fairly to determine the value of its assets, and
(iii) for such other periods as the Commission may permit.
No charge is made by any Portfolio for redemptions. Any redemption may
be more or less than the shareholder's initial cost depending on the market
value of the securities held by the Portfolio.
SHAREHOLDER SERVICES
Shareholders may transfer shares of the Portfolios to another person.
An investor wishing to transfer shares should contact the Advisor.
<PAGE>
PORTFOLIO TURNOVER
The Portfolios will not normally engage in short-term trading, but
reserve the right to do so. A high portfolio turnover rate can result in
corresponding increases in brokerage commissions; however, the Advisor will not
consider turnover rate a limiting factor in making investment decisions
consistent with that Portfolio's investment objectives and policies. The
Portfolios' portfolio turnover rates for each of the past fiscal years are set
forth under "Financial Highlights" in the Funds' Prospectuses. Changes in the
Portfolios' turnover rates were due to market fluctuations and investment
opportunities. The Glenmede Fund anticipates a variation in the portfolio
turnover rate for the Model Equity Portfolio from that reported for the
Portfolio's most recent fiscal year due to the change in how that Portfolio
seeks to achieve its investment objective.
INVESTMENT LIMITATIONS
Each Portfolio is subject to the following restrictions which are
fundamental policies and may not be changed without the approval of the lesser
of: (1) 67% of the voting securities of the affected Portfolio present at a
meeting if the holders of more than 50% of the outstanding voting securities of
the affected Portfolio are present or represented by proxy, or (2) more than 50%
of the outstanding voting securities of the affected Portfolio. Each Portfolio
will not:
(1) invest in commodities or commodity contracts, except that each
Portfolio may invest in futures contracts and options;
(2) purchase or sell real estate, although it may purchase and sell
securities of companies which deal in real estate and may purchase
and sell securities which are secured by interests in real estate;
(3) make loans, except (i) by purchasing bonds, debentures or similar
obligations (including repurchase agreements, subject to the
limitation described in investment limitation (9) below, and money
market instruments, including bankers acceptances and commercial
paper, and selling securities on a when issued, delayed settlement
or forward delivery basis) which are publicly or privately
distributed, and (ii) by lending its portfolio securities to
banks, brokers, dealers and other financial institutions so long
as such loans are not inconsistent with the 1940 Act or the rules
and regulations or interpretations of the Commission thereunder;
<PAGE>
(4) purchase on margin or sell short, except as specified above in
investment limitation (1);
(5) purchase more than 10% of any class of the outstanding voting
securities of any issuer;
(6) issue senior securities, except that a Portfolio may borrow money
in accordance with investment limitation (7) below, purchase
securities on a when issued, delayed settlement or forward
delivery basis and enter into reverse repurchase agreements;
(7) borrow money, except as a temporary measure for extraordinary or
emergency purposes, and then not in excess of 10% of its total
assets at the time of the borrowing (entering into reverse
repurchase agreements and purchasing securities on a when issued,
delayed settlement or forward delivery basis are not subject to
this investment limitation);
(8) pledge, mortgage, or hypothecate any of its assets to an extent
greater than 10% of its total assets at fair market value, except
as described in the Prospectus and this Statement of Additional
Information and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in
connection with the writing of covered put and call options and
the purchase of securities on a when issued, delayed settlement or
forward delivery basis and collateral arrangements with respect to
initial or variation margin for futures contracts will not be
deemed to be pledges of a Portfolio's assets or the purchase of
any securities on margin for purposes of this investment
limitation;
(9) underwrite the securities of other issuers or invest more than an
aggregate of 10% of the total assets of the Portfolio, at the time
of purchase, in securities subject to legal or contractual
restrictions on resale or securities for which there are no
readily available markets, including repurchase agreements which
have maturities of more than seven days;
(10) invest for the purpose of exercising control over management of
any company;
(11) invest its assets in securities of any investment company, except
in connection with mergers, acquisitions of assets or
consolidations and except as may otherwise be permitted by the
1940 Act;
<PAGE>
(12) acquire any securities of companies within one industry if, as a
result of such acquisition, more than 25% of the value of the
Portfolio's total assets would be invested in securities of
companies within such industry; provided, however, that there
shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. Government, its agencies, enterprises or
instrumentalities, or instruments issued by U.S. banks; and
(13) write or acquire options or interests in oil, gas or other mineral
exploration or development programs.
Each Portfolio, with the exception of the Muni Intermediate, New
Jersey Muni and International Fixed Income Portfolios, also will not:
(1) with respect as to 75% of its total assets, invest more than 5% of
its total assets at the time of purchase in the securities of any
single issuer (other than obligations issued or guaranteed by the
U.S. Government, its agencies, enterprises or instrumentalities).
Although not a matter of fundamental policy, pursuant to Rule 2a-7
under the 1940 Act, the Government Cash Portfolio will limit its purchases of
any one issuer's securities (other than U.S. Government Securities) to 5% of the
Portfolio's total assets at the time of purchase, except that it may invest more
than 5% (but no more than 25%) of its total assets in First Tier Securities of
one issuer for a period of up to three business days.
Each of the Muni Intermediate, New Jersey Muni and International Fixed
Income Portfolios is classified as a "non-diversified" investment company under
the 1940 Act, which means the Portfolio is not limited by the 1940 Act in the
proportion of its assets that it may invest in the securities of a single
issuer. However, each Portfolio intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Internal Revenue
Code of 1986, as amended, which generally will relieve the Portfolio of any
liability for federal income tax to the extent its earnings are distributed to
shareholders. In order to qualify as a regulated investment company for federal
income tax purposes, the Portfolio generally will limit its investments such
that at the close of each quarter of the taxable year it will not, with respect
to 50% of its total assets, invest more than 5% of its total assets at the time
of purchase in the securities of any single issuer (other than obligations
issued or guaranteed by the U.S. Government, its agencies, enterprises or
instrumentalities).
<PAGE>
If a percentage restriction is adhered to at the time an investment is
made, a later increase in percentage resulting from a change in value or assets
will not constitute a violation of such restriction.
With regard to limitation (11), the 1940 Act currently prohibits an
investment company from acquiring securities of another investment company if,
as a result of the transaction, the acquiring company and any company or
companies controlled by it would own in the aggregate: (i) more than 3% of the
total outstanding voting stock of the acquired company, (ii) securities issued
by the acquired company having an aggregate value in excess of 5% of the value
of the total assets of the acquiring company, or (iii) securities issued by the
acquired company and all other investment companies (other than treasury stock
of the acquired company) having an aggregate value in excess of 10% of the value
of the total assets of the acquiring company. In addition to the advisory fees
and other expenses that a Portfolio bears directly in connection with its own
operations, as a shareholder of another investment company, such Portfolio would
bear its "pro rata" portion of the other investment company's advisory fees and
other expenses. Therefore, to the extent that a Portfolio is invested in shares
of other investment companies, such Portfolio's shareholders will be subject to
expenses of such other investment companies, in addition to expenses of the
Portfolio.
As a matter of policy which may be changed by the particular Fund's
Board without shareholder approval, with respect to limitation (12), Portfolios
other than the Government Cash Portfolio and the Tax-Exempt Cash Portfolio will
not invest more than 25% of the value of their respective total assets in
instruments issued by U.S. banks.
With regard to limitation (13), the purchase of securities of a
corporation, a subsidiary of which has an interest in oil, gas or other mineral
exploration or development programs shall not be deemed to be prohibited by the
limitation.
As stated in the Prospectuses, each of the Funds may make commitments
with respect to a Portfolio that are more restrictive than the investment
policies and limitations described above and in the Prospectuses in order to
permit the sale of a Portfolio's shares in certain states. All these commitments
may not appear in the Prospectuses or this SAI. To permit the sale of shares of
the Equity, Small Capitalization Equity and International Portfolios in Texas,
Glenmede Fund has made commitments that those Portfolios will not invest in oil,
gas or mineral leases, or in real estate limited partnership interests that are
not readily marketable, and will not lend portfolio securities unless collateral
values are continuously maintained at no less than 100% by "marking to market"
daily and the practice is fair, just and equitable as determined by a finding
that adequate provision has been made for margin calls, termination of the loan,
reasonable servicing fees (including finders' fees), voting rights, dividend
rights, shareholder approval and disclosure, and the loan is within the
limitations approved by the SEC. Should Glenmede Fund determine that any of
these commitments is no longer in the best interests of the particular
Portfolio, it will revoke that commitment by terminating sales of the
Portfolio's shares in Texas and giving notice of such action to investors in
Texas.
<PAGE>
MANAGEMENT OF THE FUNDS
Each Fund's officers, under the supervision of the particular Board,
manage the day-to-day operations of the Fund. The Board members set broad
policies for each Fund and choose its officers. A list of the Board members and
officers and a brief statement of their current positions and principal
occupations during the past five years is set forth in the Funds'
Prospectuses.
Remuneration of Board Members
Glenmede Fund pays each Board member, other than Mr. Church, an annual
fee of $6,000 plus $1,250 for each Board meeting attended and out-of-pocket
expenses incurred in attending Board meetings. Glenmede Portfolios pays each
Board member, other than Mr. Church, an annual fee of $1,000 per year and
out-of-pocket expenses incurred in attending Board meetings. Officers of the
Funds receive no compensation as officers from the Funds.
<PAGE>
Set forth in the table below is the compensation received by Board
members for the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Aggregate Benefits
Compensation Compensation Compensation Estimated Total Annual
from from Part of Benefits Compensation
Name of Glenmede Glenmede the Funds' Upon from the
Person, Position Fund Portfolios Expense Retirement Funds
<S> <C> <C> <C> <C> <C>
Dr. H. Franklin Allen, Ph.D., $______ $______ None None $______
Director/Trustee
Willard S. Boothby, Jr., $______ $______ None None $______
Director/Trustee
John W. Church, Jr. $______ None None None None
Director/Trustee
Francis J. Palamara, $______ $______ None None $______
Director/Trustee
G. Thompson Pew, Jr., $_______ $______ None None $______
Director/Trustee
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
The Advisor, The Glenmede Trust Company, is the wholly-owned subsidiary
of The Glenmede Corporation (the "Corporation") whose shares are closely held by
63 shareholders. The Corporation has a nine person Board of Directors which, at
November 30, 1995, collectively, owned 98.67% of the Corporation's voting shares
and 41.96% of the Corporation's total outstanding shares. The members of the
Board and their respective interests in the Corporation at November 30, 1995 are
as follows:
The Glenmede Corporation Percent of Percent of
Board of Directors Voting Shares Total Shares
- ------------------------ ------------- ------------
Susan W. Catherwood............ 10.83% 1.23%
Robert G. Dunlop............... 10.83% 5.16%
Thomas W. Langfitt, M.D........ 11.07% 7.86%
Robert E. McDonald............. 10.83% 1.16%
J. Howard Pew, II.............. 10.83% 1.45%
J. N. Pew, III................. 11.07% 5.66%
J. N. Pew, IV.................. 11.07% 1.44%
R. Anderson Pew................ 11.07% 6.20%
Ethel Benson Wister............ 11.07% 11.80%
------ ------
98.67% 41.96%
<PAGE>
As noted in the Prospectus, the Advisor does not receive any fee from
the Portfolios for its investment services. However, all shareholders in the
Portfolios are clients of the Advisor or an Affiliate and, as clients, pay fees
which vary depending on the capacity in which the Advisor or Affiliate provides
fiduciary and investment services to the particular client. Such services may
include personal trust, estate settlement, advisory and custodian services. For
example, for advisory services, the Advisor charges its clients up to 1% on the
first $1 million of principal, .60% on the next $1 million of principal, .50% on
the next $3 million of principal and .40% on the next $5 million of principal,
with a minimum annual fee of $10,000. For accounts in excess of $10 million of
principal, the fee would be determined by special analysis.
Since July 1, 1995, administrative, transfer agency and dividend paying
services have been provided to each of the Funds by ICC, pursuant to a Master
Services Agreement between each of the Funds and ICC. See "Administrative,
Transfer Agency and Dividend Paying Services" in the Prospectuses for
information concerning the substantive provisions of each Master Services
Agreement. For the period July 1, 1995 to October 31, 1995, the Funds paid ICC
fees of $____ for the Government Cash Portfolio, $_____ for the Tax-Exempt Cash
Portfolio, $_____ for the Intermediate Government Portfolio, $_____ for the
International Portfolio, $_____ for the Equity Portfolio, $_____ for the Small
Capitalization Equity Portfolio, $_____ for the International Fixed Income
Portfolio, $_____ for the Model Equity Portfolio, $_____ for the Muni
Intermediate Portfolio and $_____ for the New Jersey Muni Portfolio.
From May 6, 1994 to June 30, 1995, administrative services were
provided to each Fund by The Shareholder Services Group, Inc. ("TSSG"), pursuant
to Administration Agreements. For the period November 1, 1994 to June 30, 1995,
the Funds paid TSSG administrative fees of $________ for the Government Cash
Portfolio, $_____ for the Tax-Exempt Cash Portfolio, $_______ for the
Intermediate Government Portfolio, $________ for the International Portfolio,
$_______ for the Equity Portfolio, $______ for the Small Capitalization Equity
Portfolio, $________ for the International Fixed Income Portfolio, $________ for
the Model Equity Portfolio, $________ for the Muni Intermediate Portfolio and
$_______ for the New Jersey Muni Portfolio. For the period May 6, 1994 through
October 31, 1994, the Funds paid TSSG administrative fees of $138,505 for the
Government Cash Portfolio, $96,424 for the Tax-Exempt Cash Portfolio, $166,354
for the Intermediate Government Portfolio, $126,733 for the International
Portfolio, $28,783 for the Equity Portfolio, $44,272 for the Small
Capitalization Equity Portfolio, $7,491 for the International Fixed Income
Portfolio, $9,019 for the Model Equity Portfolio, $13,154 for the Muni
Intermediate Portfolio and $1,858 for the New Jersey Muni Portfolio.
<PAGE>
Prior to May 6, 1994, The Boston Company Advisors, Inc. ("Boston
Advisors"), an indirect wholly owned subsidiary of Mellon Bank Corporation,
served as the Funds' administrator. For the period November 1, 1993 to May 5,
1994, the Funds paid fees to Boston Advisors of $106,343 for the Government Cash
Portfolio, $63,862 for the Tax-Exempt Cash Portfolio, $236,483 for the
Intermediate Government Portfolio, $108,217 for the International Portfolio,
$23,504 for the Equity Portfolio, $35,777 for the Small Capitalization Equity
Portfolio, $7,150 for the International Fixed Income Portfolio, $7,061 for the
Model Equity Portfolio, $37,283 for the Muni Intermediate Portfolio and $1,378
for the New Jersey Muni Portfolio.
For the fiscal year ended October 31, 1993, the Funds paid fees to
Boston Advisors of $193,797 for the Government Cash Portfolio, $115,854 for the
Tax-Exempt Cash Portfolio, $447,870 for the Intermediate Government Portfolio,
$176,538 for the International Portfolio, $29,773 for the Equity Portfolio and
$48,198 for the Small Capitalization Equity Portfolio and $65,070 for the Muni
Intermediate Portfolio, and for the period November 2, 1992 (commencement of
operations) to October 31, 1993, $13,347 for the International Fixed Income
Portfolio and for the period December 31, 1992 (commencement of operations) to
October 31, 1993, $8,588 for the Model Equity Portfolio.
As described more fully in the Prospectuses, the Advisor provides
shareholder support services to their clients who beneficially own shares of the
Portfolios pursuant to a Shareholder Servicing Agreement ("Agreement") with each
of the Funds. For the period January 1, 1995 to October 31, 1995, the Government
Cash, Tax-Exempt Cash, Intermediate Government, Muni Intermediate, New Jersey
Muni, International Fixed Income, Equity, International, Small Capitalization
Equity and Model Equity Portfolios had servicing fees payable to the Advisor of
$____, $_____, $____, $_____, $_____, $_____, $_____, $_____, $_____, and
$_____, respectively.
Custody services are provided to each Portfolio by The Chase Manhattan
Bank, N.A., Brooklyn, New York.
DISTRIBUTOR
Shares of each Fund are distributed continuously and are offered
without a sales load by Armata, pursuant to a Distribution Agreement between
each Fund and Armata. Armata receives no fee from the Funds for its distribution
services.
The Funds bear their own expenses incurred in their operations
including: taxes; interest; miscellaneous fees (including fees paid to their
Board members); Securities and Exchange Commission fees; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to existing
shareholders; administration fees; charges of the custodian, dividend agent
fees; certain insurance premiums; outside auditing and legal expenses; costs of
shareholders' reports and shareholder meetings; and any extraordinary expenses.
Each Portfolio also pays for brokerage fees and commissions, if any, in
connection with the purchase and sale of its portfolio securities.
<PAGE>
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreements authorize the Advisor to select the
brokers or dealers that will execute the purchases and sales of investment
securities for each of the Portfolios and direct the Advisor to use its best
efforts to obtain the best available price and most favorable execution with
respect to all transactions for the Portfolios. The Advisor may, however,
consistent with the interests of a Portfolio, select brokers on the basis of the
research, statistical and pricing services they provide to a Portfolio.
Information and research received from such brokers will be in addition to, and
not in lieu of, the services required to be performed by the Advisor under the
Investment Advisory Agreements. A commission paid to such brokers may be higher
than that which another qualified broker would have charged for effecting the
same transaction, provided that such commissions are paid in compliance with the
Securities Exchange Act of 1934, as amended, and that the Advisor determines in
good faith that such commission is reasonable in terms either of the transaction
or the overall responsibility of the Advisor to a Portfolio and the Advisor's
other clients. For the Funds' fiscal year ended October 31, 1995, however, no
brokers were selected by the Advisor on the basis of research, statistical and
pricing services provided to a Portfolio.
During the fiscal year ended October 31, 1995, the Equity,
International and Small Capitalization Equity Portfolios paid $______, $______
and $______ in brokerage commissions, respectively. During the fiscal year ended
October 31, 1994, the Equity, International, Small Capitalization Equity and
Model Equity Portfolios paid $212,177, $617,512, $180,822 and $212,005 in
brokerage commissions, respectively. During the fiscal year ended October 31,
1993, the Equity, International, Small Capitalization Equity and Model Equity
Portfolios paid $88,965, $401,382, $102,071 and $115,654 in brokerage
commissions, respectively.
The Government Cash, Intermediate Government, Muni Intermediate, New
Jersey Muni and International Fixed Income Portfolios do not currently expect to
incur any brokerage commission expense on transactions in their portfolio
securities because debt instruments are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission.
The price of the security, however, usually includes a profit to the dealer.
<PAGE>
Because shares of the Portfolios are not marketed through intermediary
brokers or dealers, it is not the Funds' practice to allocate brokerage or
effect principal transactions with dealers on the basis of sales of shares which
may be made through such firms. However, the Advisor may place portfolio orders
with qualified broker-dealers who refer clients to the Advisor.
Some securities considered for investment by each Portfolio may also be
appropriate for other clients served by the Advisor. If purchase or sale of
securities is consistent with the investment policies of a Portfolio and one or
more of these other clients served by the Advisor and is considered at or about
the same time, transactions in such securities will be allocated among the
Portfolio and clients in a manner deemed fair and reasonable by the Advisor.
While in some cases this practice could have a detrimental effect on the price,
value or quantity of the security as far as a Portfolio is concerned, in other
cases it is believed to be beneficial to the Portfolios.
ADDITIONAL INFORMATION CONCERNING TAXES
General. The following summarizes certain additional tax considerations
generally affecting the Portfolios and their shareholders that are not described
in the Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Portfolios or their shareholders, and the discussion here
and in the Prospectus is not intended as a substitute for careful tax planning.
Potential investors should consult their tax advisers with specific reference to
their own tax situation.
Each Portfolio is treated as a separate corporate entity under the
Internal Revenue Code of 1986, as amended (the "Code"), and intends to qualify
as a regulated investment company. Qualification as a regulated investment
company under the Code requires, among other things, that each Portfolio
distribute to its shareholders an amount equal to at least the sum of 90% of its
investment company taxable income and 90% of its tax-exempt income (if any) net
of certain deductions for a taxable year. In addition, each Portfolio must
satisfy certain requirements with respect to the source of its income for a
taxable year. At least 90% of the gross income of each Portfolio must be derived
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, and
other income (including, but not limited to, gains from options, futures, or
forward contracts) derived with respect to the Portfolio's business of investing
in such stock, securities or currencies. The Treasury Department may by
regulation exclude from qualifying income foreign currency gains which are not
directly related to a Portfolio's principal business of investing in stock or
securities, or options and futures with respect to stock or securities. Any
income derived by a Portfolio from a partnership or trust is treated for this
purpose as derived with respect to the Portfolio's business of investing in
stock, securities or currencies only to the extent that such income is
attributable to items of income which would have been qualifying income if
realized by the Portfolio in the same manner as by the partnership or trust.
<PAGE>
A Portfolio will not be treated as a regulated investment Company under
the Code if 30% or more of the Portfolio's gross income for a taxable year is
derived from gains realized on the sale or other disposition of the following
investments held for less than three months: (1) stock and securities (as
defined in section 2(a)(36) of the 1940 Act); (2) options, futures and forward
contracts other than those on foreign currencies; and (3) foreign currencies
(and options, futures and forward contracts on foreign currencies) that are not
directly related to a Portfolio's principal business of investing in stock and
securities (and options and futures with respect to stocks and securities).
Interest (including original issue discount and accrued market discount)
received by a Portfolio upon maturity or disposition of a security held for less
than three months will not be treated as gross income derived from the sale or
other disposition of such security within the meaning of this requirement.
However, income which is attributable to realized market appreciation will be
treated as gross income from the sale or other disposition of securities for
this purpose. With respect to covered call options, if the call is exercised by
the holder, the premium and the price received on exercise constitute the
proceeds of sale, and the difference between the proceeds and the cost of the
securities subject to the call is capital gain or loss. Premiums from expired
call options written by a Portfolio and net gains from closing purchase
transactions are treated as short-term capital gains for Federal income tax
purposes, and losses on closing purchase transactions are short-term capital
losses.
Any distribution of the excess of net long-term capital gain over net
short-term capital loss is taxable to a shareholder as long-term capital gain,
regardless of how long the shareholder has held the distributing Portfolio's
shares and whether such distribution is received in cash or additional Portfolio
shares. Each Portfolio will designate such distributions as capital gain
dividends in a written notice mailed to shareholders within 60 days after the
close of the Portfolio's taxable year. Shareholders should note that, upon the
sale or exchange of Portfolio shares, if the shareholder has not held such
shares for more than six months, any loss on the sale or exchange of those
shares will be treated as long-term capital loss to the extent of the capital
gain dividends received with respect to the shares.
<PAGE>
An individual's net capital gains are taxable at a maximum effective
rate of 28%. Ordinary income of individuals is taxable at a maximum nominal rate
of 39.6%, but because of limitations on itemized deductions otherwise allowable
and the phase-out of personal exemptions, the maximum effective marginal rate of
tax for some taxpayers may be higher. For corporations, long-term capital gains
and ordinary income are both taxable at a maximum nominal rate of 35% (although
surtax provisions apply at certain income levels to result in effective marginal
rates as high as 39%).
If for any taxable year a Portfolio does not qualify for the special
Federal income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to Federal income tax at regular corporate rates
(without any deduction for distributions to its shareholders). In such event,
dividend distributions (including amounts derived from interest on tax-exempt
obligations in the case of the Tax-Exempt Cash, Muni Intermediate and New Jersey
Muni Portfolios) would be taxable as ordinary income to shareholders to the
extent of the Portfolio's current and accumulated earnings and profits, and
would be eligible for the dividends received deduction for corporations.
Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios. As
described in the Prospectus, these Portfolios are designed to provide investors
with current tax-exempt interest income. Shares of the Portfolios would not be
suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, H.R. 10 plans and individual
retirement accounts since such plans and accounts are generally tax-exempt and,
therefore, would not only fail to gain any additional benefit from each such
Portfolio's dividends being tax-exempt, but such dividends would be ultimately
taxable to the beneficiaries when distributed to them. In addition, the
Portfolios may not be an appropriate investment for entities which are
"substantial users" of facilities financed by private activity bonds or "related
persons" thereof. "Substantial user" is defined under U.S. Treasury Regulations
to include a non-exempt person who regularly uses a part of such facilities in
his trade or business and whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, who occupies more than 5% of
the usable area of such facilities or for whom such facilities or a part thereof
were specifically constructed, reconstructed or acquired. "Related persons"
include certain related natural persons, affiliated corporations, a partnership
and its partners and an S corporation and its shareholders.
The percentage of total dividends paid by each Portfolio with respect
to any taxable year which qualify as Federal exempt-interest dividends will be
the same for all shareholders receiving dividends for such year. In order for
each Portfolio to pay exempt-interest dividends with respect to any taxable
year, at the close of each quarter of its taxable year at least 50% of the
aggregate value of each Portfolio's assets must consist of exempt-interest
obligations. After the close of its taxable year, each Portfolio will notify its
shareholders of the portion of the dividends paid by it which constitutes an
exempt-interest dividend with respect to such year. However, the aggregate
amount of dividends so designated by each Portfolio cannot exceed the excess of
the amount of interest exempt from tax under Section 103 of the Code received by
the particular Portfolio for the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code.
<PAGE>
Interest on indebtedness incurred by a shareholder to purchase or carry
such a Portfolio's shares generally is not deductible for Federal income tax
purposes if the Portfolio distributes exempt-interest dividends during the
shareholder's taxable year.
While each Portfolio will seek to invest substantially all of its
assets in tax-exempt obligations (except on a temporary basis or for temporary
defensive periods), any investment company taxable income earned by a Portfolio
will be distributed. In general, each Portfolio's investment company taxable
income will be its taxable income (including taxable interest received from
temporary investments and any net short-term capital gains realized by a
Portfolio) subject to certain adjustments and excluding the excess of any net
long-term capital gains for the taxable year over the net short-term capital
loss, if any, for such year.
Federal Taxation of Certain Financial Instruments. Generally, futures
contracts held by the International Fixed Income Portfolio at the close of the
Fund's taxable year will be treated for Federal income tax purposes as sold for
their fair market value on the last business day of such year, a process known
as "mark-to-market." Forty percent of any gain or loss resulting from such
constructive sale will be treated as short-term capital gain or loss and 60% of
such gain or loss will be treated as long-term capital gain or loss without
regard to the length of time the Portfolio holds the futures contract ("the
40%-60% rule"). The amount of any capital gain or loss actually realized by the
Portfolio in a subsequent sale or other disposition of those futures contracts
will be adjusted to reflect any capital gain or loss taken into account by the
Portfolio in a prior year as a result of the constructive sale of the contracts.
With respect to futures contracts to sell, which will be regarded as parts of a
"mixed straddle" because their values fluctuate inversely to the values of
specific securities held by the Portfolio, losses as to such contracts to sell
will be subject to certain loss deferral rules which limit the amount of loss
currently deductible on either part of the straddle to the amount thereof which
exceeds the unrecognized gain (if any) with respect to the other part of the
straddle, and to certain wash sales regulations. Under short sales rules, which
will also be applicable, the holding period of the securities forming part of
the straddle will (if they have not been held for the long term holding period)
be deemed not to begin prior to termination of the straddle. With respect to
certain futures contracts, deductions for interest and carrying charges will not
be allowed. Notwithstanding the rules described above, with respect to futures
contracts to sell which are properly identified as such, the International Fixed
Income Portfolio may make an election which will exempt (in whole or in part)
those identified futures contracts from being treated for Federal income tax
purposes as sold on the last business day of the Fund's taxable year, but gains
and losses will be subject to such short sales, wash sales and loss deferral
rules and the requirement to capitalize interest and carrying charges. Under
Temporary Regulations, the International Fixed Income Portfolio would be allowed
(in lieu of the foregoing) to elect either (1) to offset gains or losses from
positions which are part of a mixed straddle by separately identifying each
mixed straddle to which such treatment applies, or (2) to establish a mixed
straddle account for which gains and losses would be recognized and offset on a
periodic basis during the taxable year. Under either election, the 40%-60% rule
will apply to the net gain or loss attributable to the futures contracts, but in
the case of a mixed straddle account election, no more than 50% of any net gain
may be treated as long term and no more than 40% of any net loss may be treated
as short term. Options on futures contracts generally receive Federal tax
treatment similar to that described above.
<PAGE>
Certain foreign currency contracts entered into by the International or
International Fixed Income Portfolios may be subject to the "mark-to-market"
process and the 40%-60% rule in a manner similar to that described in the
preceding paragraph for futures contracts. To receive such Federal income tax
treatment, a foreign currency contract must meet the following conditions: (1)
the contract must require delivery of a foreign currency of a type in which
regulated futures contracts are traded or upon which the settlement value of the
contract depends; (2) the contract must be entered into at arm's length at a
price determined by reference to the price in the interbank market; and (3) the
contract must be traded in the interbank market. The Treasury Department has
broad authority to issue regulations under the provisions respecting foreign
currency contracts. As of the date of this Statement of Additional Information,
the Treasury has not issued any such regulations. Other foreign currency
contracts entered into by the International or International Fixed Income
Portfolio may result in the creation of one or more straddles for Federal income
tax purposes, in which case certain loss deferral, short sales, and wash sales
rules and the requirement to capitalize interest and carrying charges may apply.
As described more fully above, in order to qualify as a regulated
investment company under the Code a Portfolio must derive less than 30% of its
gross income from the sale or other disposition of securities and certain other
investments held for less than three months. With respect to futures contracts
and other financial instruments subject to the mark-to-market rules, the
Internal Revenue Service has ruled in private letter rulings that a gain
realized from such a futures contract or financial instrument will be treated as
being derived from a security held for three months or more (regardless of the
actual period for which the contract or instrument is held) if the gain arises
as a result of a constructive sale under the mark-to-market rules, and will be
treated as being derived from a security held for less than three months only if
the contract or instrument is terminated (or transferred) during the taxable
year (other than by reason of mark-to-market) and less than three months have
elapsed between the date the contract or instrument is acquired and the
termination date. In determining whether the 30% test is met for a taxable year,
increases and decreases in the value of a Portfolio's futures contracts and
other investments that qualify as part of a "designated hedge," as defined in
the Code, may be netted.
Special rules govern the Federal income tax treatment of certain
transactions denominated in terms of a currency other than the U.S. dollar or
determined by reference to the value of one or more currencies other than the
U.S. dollar. The types of transactions covered by the special rules include the
following: (i) the acquisition of, or becoming the obligor under, a bond or
other debt instrument (including, to the extent provided in Treasury
regulations, preferred stock); (ii) the accruing of certain trade receivables
and payables; and (iii) the entering into or acquisition of any forward
contract, futures contract, option and similar financial instrument if such
instrument is not marked to market. The disposition of a currency other than the
U.S. dollar by a U.S. taxpayer is also treated as a transaction subject to the
special currency rules. However, foreign currency-related regulated futures
contracts and non-equity options are generally not subject to the special
currency rules if they are or would be treated as sold for their fair market
value at year-end under the mark-to-market rules, unless an election is made to
have such currency rules apply. With respect to transactions covered by the
special rules, foreign currency gain or loss is calculated separately from any
gain or loss on the underlying transaction and is normally taxable as ordinary
gain or loss. A taxpayer may elect to treat as capital gain or loss foreign
currency gain or loss arising from certain identified forward contracts, futures
contracts and options that are capital assets in the hands of the taxpayer and
which are not part of a straddle. In accordance with Treasury regulations under
which certain transactions that are part of a "section 988 hedging transaction"
(as defined in the Code and the Treasury regulations) will be integrated and
treated as a single transaction or otherwise treated consistently for purposes
of the Code. Any gain or loss attributable to the foreign currency component of
a transaction engaged in by a Portfolio which is not subject to the special
currency rules (such as foreign equity investments other than certain preferred
stocks) will be treated as capital gain or loss and will not be segregated from
the gain or loss on the underlying transaction. It is anticipated that some of
the non-U.S. dollar denominated investments and foreign currency contracts the
International and International Fixed Income Portfolios may make or enter into
will be subject to the special currency rules described above.
<PAGE>
Special Considerations Regarding Investment In Pennsylvania
Municipal Obligations.
The concentration of investments in Pennsylvania Municipal Obligations
by the Muni Intermediate Portfolio raises special investment considerations. In
particular, changes in the economic condition and governmental policies of the
Commonwealth of Pennsylvania and its municipalities could adversely affect the
value of the Portfolio and its portfolio securities. This section briefly
describes current economic trends in Pennsylvania.
Pennsylvania has historically been dependent on heavy industry although
recent declines in the coal, steel and railroad industries have led to
diversification of the Commonwealth's economy. Recent sources of economic growth
in Pennsylvania are in the service sector, including trade, medical and health
services, education and financial institutions. Agriculture continues to be an
important component of the Commonwealth's economic structure, with nearly
one-third of the Commonwealth's total land area devoted to cropland, pasture and
farm woodlands.
The population of Pennsylvania experienced a slight increase in the
period 1980 through 1990 and has a high proportion of persons 65 or older. The
Commonwealth is highly urbanized, with almost 85% of the 1980 census population
residing in metropolitan statistical areas. The two largest metropolitan
statistical areas, those containing the Cities of Philadelphia and Pittsburgh,
together comprise approximately 50% of the Commonwealth's total population.
<PAGE>
The Commonwealth utilizes the fund method of accounting and over 120
funds have been established for purposes of recording receipts and disbursements
of the Commonwealth, of which the General Fund is the largest. Most of the
Commonwealth's operating and administrative expenses are payable from the
General Fund. The major tax sources for the General Fund are the sales tax
(33.7% of General Fund revenues in fiscal 1994), the personal income tax (32% of
General Fund revenues in fiscal 1994) and the corporate net income tax (10.2% of
General Fund revenues in fiscal 1994). Major expenditures of the Commonwealth
include funding for education (42.5% of total fiscal 1994 expenditures), public
health and welfare (34.5% of the fiscal 1994 expenditures), transportation, and
economic development.
The constitution of the Commonwealth provides that operating budget
appropriations of the Commonwealth may not exceed the estimated revenues and
available surplus in the fiscal year for which funds are appropriated. Annual
budgets are enacted for the General Fund and for certain special revenue funds
which together represent the majority of expenditures of the Commonwealth. The
Commonwealth reported a positive unreserved/undesignated fund balance in its
governmental fund types applying generally accepted accounting principles
("GAAP") at the end of each fiscal year (ending June 30) from fiscal 1984, when
its financial statements were first prepared on a basis consistent with GAAP,
through fiscal 1989, and the General Fund recorded revenues and other sources in
excess of expenditures and other uses for each fiscal year from 1985 through
1989 (except for fiscal 1988 in which a decline in fund equity of $246.7 million
occurred). Although the balance in the General Fund of the Commonwealth (the
principal operating fund of the Commonwealth) declined to a zero balance at the
close of fiscal 1989, and a negative balance was experienced in fiscal 1990 and
1991, tax increases and spending decreases helped return the General Fund
balance to a surplus at June 30, 1992 of $87.5 million and at June 30, 1993 of
$698.9 million. The deficit in the Commonwealth's unreserved/undesignated funds
of prior years was also reversed to a surplus of $64.4 million as of June 30,
1993.
Current constitutional provisions permit the Commonwealth to issue the
following types of debt: (i) electorate approved debt, (ii) debt for capital
projects subject to an aggregate debt limit of 1.75 times the annual average tax
revenues of the preceding five fiscal years, (iii) tax anticipation notes
payable in the fiscal year of issuance and (iv) debt to suppress insurrection or
rehabilitate areas affected by disaster. General obligation debt totaled
$5,075.8 million at June 30, 1994. Certain state-created agencies issue debt
supported by assets of, or revenues derived from, the various projects financed
and the debt of such agencies is not an obligation of the Commonwealth although
some of the agencies are indirectly dependent on Commonwealth appropriations.
<PAGE>
Certain litigation is pending against the Commonwealth that could
adversely affect the ability of the Commonwealth to pay debt service on its
obligations including suits relating to the following matters: (a) the ACLU has
filed suit in federal court demanding additional funding for child welfare
services; the Commonwealth settled a similar suit in the Commonwealth Court of
Pennsylvania and is seeking the dismissal of the federal suit, inter alia,
because of that settlement. The District Court has denied class certification to
the ACLU, and the parties have stipulated to a judgment against the plaintiffs
to allow plaintiffs to appeal the denial of class certification to the Third
Circuit (no available estimates of potential liability); (b) in 1987, the
Supreme Court of Pennsylvania held that the statutory scheme for county funding
of the judicial system to be in conflict with the constitution of the
Commonwealth, but stayed judgment pending enactment by the legislature of
funding consistent with the opinion and the legislature has yet to consider
legislation implementing the judgment; in 1992, a new action in mandamus was
filed seeking to compel the Commonwealth to comply with the original decision;
(c) several banks have filed suit against the Commonwealth contesting the
constitutionality of a law enacted in 1989 imposing a bank shares tax; in July
1994, the Commonwealth Court en banc upheld the constitutionality of the 1989
bank shares tax law, but struck down a companion law to provide credits against
the bank shares tax for new banks; cross-appeals from that decision to the
Pennsylvania Supreme Court have been filed; (d) litigation has been filed in
both state and federal court by an association of rural and small schools and
several individual school districts and parents challenging the
constitutionality of the Commonwealth's system for funding local school
districts -- the federal case has been stayed pending resolution of the state
case and the state case is in the pre-trial stage (no available estimate of
potential liability); (e) the ACLU has brought a class action on behalf of
inmates challenging the conditions of confinement in thirteen of the
Commonwealth's correctional institutions; a proposal settlement agreement has
been submitted to the court and members of the class for their review (no
available estimate of potential cost of complying with the injunction sought but
capital and personnel costs might amount to millions of dollars); (f) a
consortium of public interest law firms has filed a class action suit alleging
that the Commonwealth has not complied with a federal mandate to provide
screening, diagnostic and treatment services for all Medicaid-eligible children
under 21; the District Court denied class certification, and the parties have
submitted a tentative settlement agreement to the court for approval; and (g)
litigation has been filed in federal court by the Pennsylvania Medical Society
seeking payment of the full co-pay and deductible in excess of the maximum fees
set under the Commonwealth's medical assistance program for outpatient services
provided to medical assistance patients who also are eligible for Medicare; the
Commonwealth received a favorable decision in the federal district court, but
the Pennsylvania Medical Society won a reversal in the federal circuit court
(potential liability estimated at $50 million per year).
<PAGE>
Local government units in the Commonwealth of Pennsylvania (which
include, among other things, counties, cities, boroughs, towns, townships,
school districts and other municipally created units such as industrial
development authorities and municipality authorities, including water and sewer
authorities) are permitted to issue debt for capital projects: (i) in any amount
so long as the debt has been approved by the voters of the local government
unit; or (ii) without electoral approval if the aggregate outstanding principal
amount of debt of the local government unit is not in excess of 100% of its
borrowing base (in the case of a school district of the first class), 300% of
its borrowing base (in the case of a county) or 250% of its borrowing base (in
the case of all other local government units); or (iii) without electoral
approval and without regard to the limit described in (ii) in any amount in the
case of certain subsidized debt and self-liquidating debt (defined to be debt
with no claim on taxing power, secured solely by revenues from a specific source
which have been projected to be sufficient to pay debt service on the related
debt). Lease rental debt may also be issued, in which case the total debt limits
described in section (ii) (taking into account all existing lease rental debt in
addition to all other debt) are increased. The borrowing base for a local
government unit is the average of total revenues for the three fiscal years
preceding the borrowing. The risk of investing in debt issued by any particular
local government unit depends, in the case of general obligation bonds secured
by tax revenues, on the credit-worthiness of that issuer or, in the case of
revenue bonds, on the revenue producing ability of the project being financed,
and not directly on the credit-worthiness of the Commonwealth of Pennsylvania as
a whole.
The City of Philadelphia (the "City") has been experiencing severe
financial difficulties which has impaired its access to public credit markets
and a long-term solution to the City's financial crisis is still being sought.
The City experienced a series of General Fund deficits for Fiscal Years 1988
through 1992. The City has no legal authority to issue deficit reduction bonds
on its own behalf, but state legislation has been enacted to create an
Intergovernmental Cooperation Authority (the "Authority") to provide fiscal
oversight for Pennsylvania cities (primarily Philadelphia) suffering recurring
financial difficulties. The Authority is broadly empowered to assist cities in
avoiding defaults and eliminating deficits by encouraging the adoption of sound
budgetary practices and issuing bonds. In order for the Authority to issue bonds
on behalf of the City, the City and the Authority entered into an
intergovernmental cooperative agreement providing the Authority with certain
oversight powers with respect to the fiscal affairs of the City. The Authority
approved the latest update of the City's five-year financial plan on May 2,
1994. The City has reported a surplus of approximately $15 million for the
fiscal year ending June 30, 1994. In June 1992, the Authority issued
$474,555,000 in bonds to liquidate the City's deficit balance in its general
fund. Since then the Authority has issued an additional $944,125 in bonds to
refund certain general obligation bonds of the City and to fund additional
capital projects. The Authority's power to issue debt for a capital project or
deficit expired on December 31, 1994, but its power to issue debt to finance a
cash flow deficit extends until December 31, 1996.
<PAGE>
The foregoing information as to certain Pennsylvania risk factors
constitutes only a brief summary, does not purport to be a complete description
of Pennsylvania risk factors and is principally drawn from official statements
relating to securities offerings of the Commonwealth of Pennsylvania that have
come to the Funds' attention and were available as of the date of this Statement
of Additional Information.
Special Considerations Regarding Investment in New Jersey
Municipal Obligations
The State of New Jersey and its political subdivisions, agencies and
public authorities are authorized to issue two general classes of indebtedness;
general obligation bonds and revenue bonds. Both classes of bonds may be
included in the New Jersey Muni Portfolio. The repayment of principal and
interest on general obligation bonds is secured by the full faith and credit of
the issuer, backed by the issuer's taxing authority, without recourse to any
special project or source of revenue. Special obligation or revenue bonds may be
repaid only from revenues received in connection with the project for which the
bonds are issued, special excise taxes, or other special revenue sources and
generally are issued by entities without taxing power. Neither the State of New
Jersey nor any of its subdivisions is liable for the repayment of principal or
interest on revenue bonds except to the extent stated in the preceding
sentences.
General obligation bonds of the state are repaid from revenues obtained
through the state's general taxing authority. An inability to increase taxes may
adversely affect the state's ability to authorize or repay debt.
Public authorities, private non-profit corporations, agencies and
similar entities of New Jersey ("Authorities") are established for a variety of
beneficial purposes, including economic development, housing and mortgage
financing, health care facilities and public transportation. The Authorities are
not operating entities of the State of New Jersey, but are separate legal
entities that are managed independently. The state oversees the Authorities by
appointing the governing boards, designating management, and by significantly
influencing operations. The Authorities are not subject to New Jersey
constitutional restrictions on the incurrence of debt, applicable to the State
of New Jersey itself, and may issue special obligation or private activity bonds
in legislatively authorized amounts.
<PAGE>
An absence or reduction of revenue will affect a bond-issuing
Authority's ability to repay debt on special obligation bonds and no assurance
can be given that sufficient revenues will be obtained to make such payments,
although in some instances repayment may be guaranteed or otherwise secured.
Various Authorities have issued bonds for the construction of health
care facilities, transportation facilities, office buildings and related
facilities, housing facilities, pollution control facilities, water and sewerage
facilities and power and electric facilities. Each of these facilities may incur
different difficulties in meeting its debt repayment obligations. Hospital
facilities, for example, are subject to changes in Medicare and Medicaid
reimbursement regulations, attempts by Federal and state legislatures to limit
the costs of health care and management's ability to complete construction
projects on a timely basis as well as to maintain projected rates of occupancy
and utilization. At any given time, there are several proposals pending on a
Federal and state level concerning health care which may further affect a
hospital's debt service obligation.
Housing facilities may be subject to increases in operating costs,
management's ability to maintain occupancy levels, rent restrictions and
availability of Federal or state subsidies, while power and electric facilities
may be subject to increased costs resulting from environmental restrictions,
fluctuations in fuel costs, delays in licensing procedures and the general
regulatory framework in which these facilities operate. All of these entities
are constructed and operated under rigid regulatory guidelines.
Some entities which financed facilities with proceeds of private
activity bonds issued by the New Jersey Economic Development Authority, a major
issuer of special obligation bonds, have defaulted on their debt service
obligations. Because these special obligation bonds were repayable only from
revenue received from the specific projects which they funded, the New Jersey
Economic Development Authority was unable to repay the debt service to
bondholders for such facilities. Each issue of special obligation bonds,
however, depends on its own revenue for repayment, and thus these defaults
should not affect the ability of the New Jersey Economic Development Authority
to repay obligations on other bonds that it issues in the future.
<PAGE>
The state has, in the past, experienced a period of substantial
economic growth with unemployment levels below the national average. Recently,
however, the state has experienced an economic slowdown, and its unemployment
rate has risen to the extent the state has lost its relative advantage over the
nation. To the extent that any adverse conditions exist in the future which
affect the obligor's ability to repay debt, the value of the Portfolio may be
immediately and substantially affected.
The following are cases presently pending or threatened in which the
State has a potential for either a significant loss of revenue or a significant
unanticipated expenditure: (i) several labor unions have challenged 1992
legislation mandating a revaluation of several public employee pension funds
which resulted in a refund of $773 million in public employer contributions to
the State and annual savings to the State of approximately $226 million for
fiscal 1993 and thereafter; (ii) in June 1990, the State Supreme Court held the
State's public school funding mechanism unconstitutional; legislation which was
enacted to establish a new funding system has also been challenged; (iii)
several cases filed in the State courts challenged the basis on which recoveries
of certain costs for residents in State psychiatric hospitals and other
facilities are shared between the State Department of Human Services and the
State's county governments, and certain counties are seeking the recovery from
the Department of costs they have incurred for the maintenance of such
residents; (iv) a lawsuit filed in the United States District Court in 1990
alleges that the State Department of Human Services has established unreasonably
low medicaid payment rates for long-term care facilities; (v) a number of
taxpayers are seeking refunds of taxes paid to the Spill Compensation Fund, on
the grounds, inter alia, that the State law is preempted by the Federal
Superfund legislation; (vi) the 1990 Fair Automobile Insurance Reform Act has
been challenged in several State court suits, including provisions to the Act
dealing with the premium tax surtax which was intended to raise $300 million in
1993; (vii) a suit was filed in 1991 seeking to impose directly on the State the
responsibility for funding the State's judicial system, which has been primarily
funded by the counties; (viii) several union welfare benefit plans are
challenging the State's hospital rate-setting system in a suit filed in United
States District Court; the Court held in 1992 that certain provisions of the
State system are preempted by Federal law; and (ix) the method by which various
State agencies reduced their personnel has been challenged and the case is
pending before the State Supreme Court.
Although the Portfolio generally intends to invest its assets primarily
in New Jersey Municipal Obligations rated no lower than A, MIG2 or Prime-1 by
Moody's or A SP-1 or A-1 by S&P, there can be no assurance that such ratings
will remain in effect until the bond matures or is redeemed or will not be
revised downward or withdrawn. Such a revision or withdrawal may have an adverse
affect on the market price of such securities.
<PAGE>
PERFORMANCE CALCULATIONS
The "yield" and "effective yield" of the Government Cash and Tax-Exempt
Cash Portfolios (the "Cash Portfolios"), and the "tax-equivalent yield" of the
Tax-Exempt Cash Portfolio, are calculated according to formulas prescribed by
the Commission. The standardized seven-day yield of each of these Portfolios is
computed by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account in the particular Portfolio having
a balance of one share at the beginning of the period, dividing the net change
in account value by the value of the account at the beginning of the base period
to obtain the base period return, and multiplying the base period return by
(365/7). The net change in the value of an account in the Cash Portfolios
includes the value of additional shares purchased with dividends from the
original share, and dividends declared on both the original share and any such
additional shares, net of all fees, other than nonrecurring account or sales
charges, that are charged by the Fund to all shareholder accounts in proportion
to the length of the base period and the Portfolio's average account size. The
capital changes to be excluded from the calculation of the net change in account
value are realized gains and losses from the sale of securities and unrealized
appreciation and depreciation. An effective annualized yield for the Cash
Portfolios may be computed by compounding the unannualized base period return
(calculated as above) by adding 1 to the base period return, raising the sum to
a power equal to 365 divided by 7, and subtracting 1 from the result.
The Tax-Exempt Cash Portfolio's "7-day tax-equivalent yield" may be
computed by dividing the tax-exempt portion of the Portfolio's yield (calculated
as above) by one minus a stated Federal income tax rate and adding the product
to that portion, if any, of the Portfolio's yield that is not tax-exempt. The
Tax-Exempt Cash Portfolio's tax-equivalent yield, and the Cash Portfolios' yield
and effective yield, do not reflect any fees charged by the Advisor to its
clients. See "Investment Advisor."
Set forth below is an example, for purposes of illustration only, of
the current yield calculations for each of the Cash Portfolios for the seven day
period ended October 31, 1995.
Government Cash Tax-Exempt
Portfolio Cash Portfolio
10/31/95 10/31/95
---------------- ---------------
7-Day Yield (Net Change
X 365/7 average net
asset value) ____% ____%
7-Day Effective Yield ____% ____%
7-Day Tax-Equivalent Yield ____ ____%*
- --------------
* Assumes an effective Federal income tax rate of ____%
<PAGE>
The SEC yield of the Intermediate Government Portfolio, Muni
Intermediate Portfolio, New Jersey Muni Portfolio and the International Fixed
Income Portfolio for the 30-day period ended October 31, 1995 was ____%, ____%,
____% and ____%, respectively. These yields were calculated by dividing the net
investment income per share (as described below) earned by the Portfolio during
a 30-day (or one month) period by the maximum offering price per share on the
last day of the period and annualizing the result on a semi-annual basis by
adding one to the quotient, raising the sum to the power of six, subtracting one
from the result and then doubling the difference. The Portfolio's net investment
income per share earned during the period is based on the average daily number
of shares outstanding during the period entitled to receive dividends and
includes dividends and interest earned during the period minus expenses accrued
for the period, net of reimbursements. This calculation can be expressed as
follows:
6
Yield = 2 [( a-b + 1) - 1]
---
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period net of reimbursements.
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = maximum offering price per share on the last day of the
period.
For the purpose of determining net investment income earned during the
period (variable "a" in the formula), interest earned on any debt obligations
held by the Intermediate Government, Muni Intermediate, New Jersey Muni or
International Fixed Income Portfolios is calculated by computing the yield to
maturity of each obligation held by the Portfolio based on the market value of
the obligation (including actual accrued interest) at the close of business on
the last business day of each month, or, with respect to obligations purchased
during the month, the purchase price (plus actual accrued interest) and dividing
the result by 360 and multiplying the quotient by the market value of the
obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that the
obligation is held by the particular Portfolio. For purposes of this
calculation, it is assumed that each month contains 30 days. The maturity of an
obligation with a call provision is the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. With
respect to debt obligations purchased at a discount or premium, the formula
generally calls for amortization of the discount or premium. The amortization
schedule will be adjusted monthly to reflect changes in the market values of
such debt obligations.
Undeclared earned income will be subtracted from the maximum offering
price per share (variable "d" in the formula). Undeclared earned income is the
net investment income which, at the end of the base period, has not been
declared as a dividend, but is reasonably expected to be and is declared and
paid as a dividend shortly thereafter. The Intermediate Government, Muni
Intermediate, New Jersey Muni and International Fixed Income Portfolios' yields
do not reflect any fees charged by the Advisor or an Affiliate to its clients.
See "Investment Advisor."
The Muni Intermediate and New Jersey Muni Portfolios' "tax-equivalent"
yield is computed by dividing the portion of the yield that is exempt from
Federal and/or State income taxes by one minus a stated Federal income tax rate
and/or the State income tax rate and by adding that figure to that portion, if
any, of the yield that is not tax-exempt. The 30 day tax-equivalent yield for
the Muni Intermediate Portfolio and New Jersey Portfolio for the 30-day period
ended October 31, 1995 was ____% and ____%, respectively (assuming a marginal
Federal income tax rate of _____% and marginal Pennsylvania and New Jersey
income tax rates of _____ and ____%, respectively).
<PAGE>
The Intermediate Government, Equity, International, Small
Capitalization Equity, Muni Intermediate, New Jersey Muni, International Fixed
Income and Model Equity Portfolios each compute their respective average annual
total returns by determining the average annual compounded rates of return
during specified periods that equate the initial amount invested to the ending
redeemable value of such investment. This is done by dividing the ending
redeemable value of a hypothetical $1,000 initial payment by $1,000 and raising
the quotient to a power equal to one divided by the number of years (or
fractional portion thereof) covered by the computation and subtracting one from
the result. This calculation can be expressed as follows:
l/n
T = [( ERV ) - 1]
---
P
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of
years.
The Intermediate Government, Equity, International, Small
Capitalization Equity, Muni Intermediate, New Jersey Muni, International Fixed
Income and Model Equity Portfolios compute their aggregate total returns by
determining the aggregate rates of return during specified periods that likewise
equate the initial amount invested to the ending redeemable value of such
investment. The formula for calculating aggregate total return is as follows:
T = [( ERV ) - 1]
---
P
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions.
The ending redeemable value (variable "ERV" in each formula) is determined by
assuming complete redemption of the hypothetical investment and the deduction of
all nonrecurring charges at the end of the period covered by the computations.
Each Portfolio's average annual total return and aggregate total return do not
reflect any fees charged by the Advisor to its clients. See "Investment
Advisor."
Set forth below are the average annual total return figures for the
Intermediate Government, Equity, International, Small Capitalization Equity,
Muni Intermediate, International Fixed Income , Model Equity and New Jersey Muni
Portfolios since inception and for the one year and five year periods ended
October 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
Small International
Intermediate Capitalization Muni Fixed
Government Equity International Equity Intermediate Income
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ --------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 Year Ended 10/31/95 _____% _____% _____% _____% _____% ____%
5 Years Ended 10/31/95 _____% _____% _____% _____ N/A N/A
Inception to 10/31/95 _____% _____% _____% _____% _____% ____%
</TABLE>
<TABLE>
<CAPTION>
Model New
Equity Jersey Muni
Portfolio Portfolio
--------- -----------
<S> <C> <C>
1 Year Ended 10/31/95 _____% _____
Inception to 10/31/95 _____% _____%
</TABLE>
Inception Dates:
Intermediate Government Portfolio............................ 11/17/88
Equity Portfolio............................................. 07/20/89
International Portfolio...................................... 11/17/88
Small Capitalization Equity Portfolio........................ 03/01/91
Muni Intermediate Portfolio.................................. 06/05/92
International Fixed Income Portfolio......................... 11/02/92
Model Equity Portfolio....................................... 12/31/92
New Jersey Muni Portfolio.................................... 11/01/93
Set forth below are the aggregate total return figures for the
Intermediate Government, Equity, International, Small Capitalization Equity,
Muni Intermediate, International Fixed Income, Model Equity and New Jersey Muni
Portfolios from inception to October 31, 1995.
Portfolio Inception Date Aggregate Total Return
- --------- -------------- ----------------------
Intermediate Government 11/17/88 _____%
Equity 07/20/89 _____%
International 11/17/88 _____%
Small Capitalization Equity 03/01/91 _____%
Muni Intermediate 06/05/92 _____%
International Fixed Income 11/02/92 _____%
Model Equity 12/31/92 _____%
New Jersey Muni 11/01/93 _____%
GENERAL INFORMATION
Dividends and Capital Gains Distributions
Each Portfolio's policy is to distribute substantially all of its net
investment income, if any, together with any net realized capital gains in the
amount and at the times that will avoid both income (including capital gains)
taxes on it and the imposition of the Federal excise tax on undistributed income
and gains (see discussion under "Dividends, Capital Gains Distributions and
Taxes" in the Prospectus). As set forth in the Prospectuses, the Government Cash
and the Tax-Exempt Cash Portfolios declare dividends daily and normally
<PAGE>
distribute substantially all of their net investment income to shareholders
monthly; the International Fixed Income, International, Equity, Small
Capitalization Equity and Model Equity Portfolios normally distribute
substantially all of their net investment income to shareholders in the form of
a quarterly dividend and the Intermediate Government, Muni Intermediate and New
Jersey Muni Portfolios normally distribute substantially all of their net
investment income to shareholders in the form of a monthly dividend. If any net
capital gains are realized by a Portfolio, that Portfolio normally distributes
such gains at least once a year. The amounts of any income dividends or
capital gains distributions for a Portfolio cannot be predicted.
Any dividend or distribution paid shortly after the purchase of shares
of a Portfolio by an investor may have the effect of reducing the per share net
asset value of that Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectus.
Certain Record Holders
As of November 30, 1995, the Advisor held of record 100% of the
outstanding shares of each Portfolio other than the International Portfolio. For
more information about the Advisor, see "Investment Advisor" in the Prospectus.
To the Funds' knowledge, as of November 30, 1995, no person owned, beneficially
or of record, 5% or more of the outstanding shares of the International
Portfolio. As of November 30, 1995, the directors/trustees and officers of the
Funds collectively owned less than 1% of the outstanding shares of each of the
Funds' Portfolios.
FINANCIAL STATEMENTS
The Funds' Financial Statements for the year ended October 31, 199_
and the financial highlights for each of the respective periods presented,
appearing in the 199_ Annual Report to Shareholders, and the reports thereon
of __________________, the Funds' independent accountants, also appearing
therein, are incorporated by reference in this Statement of Additional
Information.
<PAGE>
APPENDIX -- DESCRIPTION OF SECURITIES AND RATINGS
I. Description of Bond Ratings
Excerpts from Moody's description of its highest bond ratings: Aaa --
judged to be the best quality; carry the smallest degree of investment risk; Aa
- -- judged to be of high quality by all standards; A -- judged to be of upper
medium quality; factors giving security to principal and interest considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future; Baa -- judged to be of medium quality;
lacking outstanding investment characteristics and in fact having speculative
characteristics.
Excerpts from S&P description of its highest bond ratings: AAA --
highest grade obligations; indicates an extremely strong capacity to pay
interest and repay principal; AA -- also qualify as high grade obligations;
indicates a very strong capacity to pay interest and repay principal and differs
from AAA issues only in small degree; A -- qualifies as upper medium grade
obligations; have strong capacity to pay interest and repay principal, although
somewhat more susceptible to adverse effects of change in circumstances and
economic conditions than higher rated bonds; BBB -- indicates adequate capacity
to pay interest and repay principal, although adverse economic conditions are
likely to weaken such capacity.
Description of Moody's ratings of state and municipal notes: Moody's
ratings for state and municipal notes, other short-term obligations and variable
rate demand obligations are as follows: MIG-1/VMIG-1 -- Best quality, enjoying
strong protection by established cash flows, superior liquidity support or
demonstrated broadbased access to the market for refinancing; MIG-2/VMIG-2 --
High quality with margins of protection ample although not so large as in the
preceding group.
Description of Moody's highest commercial paper rating: Prime-1 ("P-1")
- -- judged to be of the best quality. Issuers rated P-1 (or related supporting
institutions) are considered to have a superior capacity for repayment of
short-term promissory obligations.
Excerpt from S&P rating of municipal note issues: SP-1+ --overwhelming
capacity to pay principal and interest; SP-1 -- very strong or strong capacity
to pay principal and interest.
Description of S&P highest commercial papers ratings: A-1+ -- this
designation indicates the degree of safety regarding timely payment is
overwhelming. A-1 -- this designation indicates the degree of safety regarding
timely payment is either overwhelming or very strong.
<PAGE>
II. Description of Mortgage-Backed Securities
Mortgage-backed securities represent an ownership interest in a pool of
residential mortgage loans. These securities are designed to provide monthly
payments of interest and principal to the investor. The mortgagor's monthly
payments to his/her lending institution are "passed-through" to an investor such
as the Government Cash Portfolio and the Intermediate Government Portfolio. Most
issuers or poolers provide guarantees of payments, regardless of whether or not
the mortgagor actually makes the payment. The guarantees made by issuers or
poolers are supported by various forms of credit, collateral, guarantees or
insurance, including individual loan, title, pool and hazard insurance purchased
by the issuer. There can be no assurance that the private issuers or poolers can
meet their obligations under the policies. Mortgage-backed securities issued by
private issuers or poolers, whether or not such securities are subject to
guarantees, may entail greater risk than securities directly or indirectly
guaranteed by the U.S. Government.
About Mortgage-Backed Securities. Interests in pools of mortgage-backed
securities differ from other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the individual
borrowers on their residential mortgage loans, net of any fees paid. Additional
payments are caused by repayments resulting from the sale of the underlying
residential property, refinancing or foreclosure net of fees or costs which may
be incurred. Some mortgage-backed securities are described as "modified
pass-through." These securities entitle the holders to receive all interest and
principal payments owed on the mortgages in the pool, net of certain fees,
regardless of whether or not the mortgagors actually make the payments.
Residential mortgage loans are pooled by the Federal Home Loan Mortgage
Corporation (FHLMC). FHLMC is a corporate instrumentality of the U.S. Government
and was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. Its stock is owned by
the twelve Federal Home Loan Banks. FHLMC issues Participation Certificates
("PC's") which represent interests in mortgages from FHLMC's national portfolio.
FHLMC guarantees the timely payment of interest and ultimate collection of
principal.
The Federal National Mortgage Association (FNMA) is a Government
sponsored corporation owned entirely by private stockholders. It is subject to
general regulation by the Secretary of Housing and Urban Development. FNMA
purchases residential mortgages from a list of approved seller/servicers which
include state and federally-chartered savings and loan associations, mutual
savings banks, commercial banks and credit unions and mortgage bankers.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA.
<PAGE>
The principal Government guarantor of mortgage-backed securities is the
Government National Mortgage Association (GNMA). GNMA is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban Development.
FNMA is authorized to guarantee, with the full faith and credit of the U.S.
Government, the timely payment of principal and interest on securities issued by
approved institutions and backed by pools of FHA-insured or VA-guaranteed
mortgages.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional residential mortgage loans. Pools
created by such non-governmental issuers generally offer a higher rate of
interest than Government and Government-related pools because there are no
direct or indirect Government guarantees of payments in the former pools.
However, timely payment of interest and principal of these pools is supported by
various forms of insurance or guarantees, including individual loan, title, pool
and hazard insurance purchased by the issuer. The insurance and guarantees are
issued by Governmental entities, private insurers and the mortgage poolers.
There can be no assurance that the private insurers or mortgage poolers can meet
their obligations under the policies.
The Funds expect that Governmental or private entities may create
mortgage loan pools offering pass-through investments in addition to those
described above. The mortgages underlying these securities may be alternative
mortgage instruments, that is, mortgage instruments whose principal or interest
payment may vary or whose terms to maturity may be shorter than previously
customary. As new types of mortgage-backed securities are developed and offered
to investors, each of the Government Cash Portfolio and the Intermediate
Government Portfolio will, consistent with its investment objective and
policies, consider making investments in such new types of securities.
Underlying Mortgages. Pools consist of whole mortgage loans or
participations in loans. The majority of these loans are made to purchasers of
1-4 family homes. The terms and characteristics of the mortgage instruments are
generally uniform within a pool but may vary among pools. For example, in
addition to fixed-rate, fixed-term mortgages, the Intermediate Government
Portfolio may purchase pools of variable rate mortgages (VRM), growing equity
mortgages (GEM), graduated payment mortgages (GPM) and other types where the
principal and interest payment procedures vary. VRMs are mortgages which reset
the mortgage's interest rate periodically with changes in open market interest
rates. To the extent that the Portfolio is actually invested in VRMs, the
Portfolio's interest income will vary with changes in the applicable interest
rate on pools of VRMs. GPM and GEM pools maintain constant interest rates, with
varying levels of principal repayment over the life of the mortgage. These
different interest and principal payment procedures should not impact the
Portfolio's net asset value since the prices at which these securities are
valued will reflect the payment procedures.
<PAGE>
All poolers apply standards for qualification to local lending
institutions which originate mortgages for the pools. Poolers also establish
credit standards and underwriting criteria for individual mortgages included in
the pools. In addition, some mortgages included in pools are insured through
private mortgage insurance companies.
Average Life. The average life of pass-through pools varies with the
maturities of the underlying mortgage instruments. In addition, a pool's term
may be shortened by unscheduled or early payments of principal and interest on
the underlying mortgages. The occurrence of mortgage prepayments is affected by
factors including the level of interest rate, general economic conditions, the
location and age of the mortgage and other social and demographic conditions.
As prepayment rates of individual pools vary widely, it is not possible
to accurately predict the average life of a particular pool. For pools of fixed
rate 30 year mortgages, common industry practice is to assume that prepayments
will result in a 12-year average life. Pools of mortgages with other maturities
or different characteristics will have varying assumptions for average life.
Returns on Mortgage-Backed Securities. Yields on mortgage-backed
pass-through securities are typically quoted based on the maturity of the
underlying instruments and the associated average life assumption. Actual
prepayment experience may cause the yield to differ from the assumed average
life yield.
Reinvestment of prepayments may occur at higher or lower interest rates
than the original investment, thus affecting the yields of the Portfolios which
invest in them. The compounding effect from reinvestments of monthly payments
received by a Portfolio will increase its yield to shareholders, compared to
bonds that pay interest semi-annually.
<PAGE>
III. Description of U.S. Government Securities and Certain Other
Securities
The term "U.S. Government securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of
the United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored enterprises or instrumentalities may or may not be backed
by the full faith and credit of the United States. In the case of securities not
backed by the full faith and credit of the United States, an investor must look
principally to the agency, enterprise or instrumentality issuing or guaranteeing
the obligation for ultimate repayment, and may not be able to assert a claim
against the United States itself in the event the agency, enterprise or
instrumentality does not meet its commitment. Agencies which are backed by the
full faith and credit of the United States include the Export Import Bank,
Farmers Home Administration, Federal Financing Bank and others. Certain
agencies, enterprises and instrumentalities, such as the Government National
Mortgage Association are, in effect, backed by the full faith and credit of the
United States through provisions in their charters that they may make
"indefinite and unlimited" drawings on the Treasury, if needed to service its
debt. Debt from certain other agencies, enterprises and instrumentalities,
including the Federal Home Loan Bank and Federal National Mortgage Association,
are not guaranteed by the United States, but those institutions are protected by
the discretionary authority for the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies, enterprises and instrumentalities, such as the Farm
Credit System and the Federal Home Loan Mortgage Corporation, are federally
chartered institutions under Government supervision, but their debt securities
are backed only by the creditworthiness of those institutions, not the U.S.
Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration and The Tennessee Valley Authority.
An instrumentality of the U.S. Government is a Government agency
organized under Federal charter with Government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Overseas Private
Investment Corporation, Federal Home Loan Banks, the Federal Land Banks, Central
Bank for Cooperatives, Federal Intermediate Credit Banks and the Federal
National Mortgage Association.
<PAGE>
International institutions that issue securities which the Intermediate
Government Portfolio may purchase include the Asian Development Bank,
Inter-American Development Bank and the International Bank for Reconstruction
and Development (the "World Bank").
IV. Description of Municipal Obligations
Municipal Obligations generally include debt obligations issued by
states and their political subdivisions, and duly constituted authorities and
corporations, to obtain funds to construct, repair or improve various public
facilities such as airports, bridges, highways, hospitals, housing, schools,
streets and water and sewer works. Municipal Obligations may also be issued to
refinance outstanding obligations as well as to obtain funds for general
operating expenses and for loan to other public institutions and facilities.
The two principal classifications of Municipal Obligations are "general
obligation" and "revenue" or "special tax" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue or special tax bonds are payable
only from the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise or other tax, but not
from general tax revenues. The Tax-Exempt Cash Portfolio may also invest in
tax-exempt industrial development bonds, short-term municipal obligations (rated
SP-1+ or SP-1 by S&P or MIG-1/VMIG-1 by Moody's), project notes, demand notes
and tax-exempt commercial paper (rated A-1+ or A-1 by S&P or P-1 by Moody's),
and municipal bonds with a remaining effective maturity of 13 months or less
(rated AA or better by S&P or Aa or better by Moody's).
Industrial revenue bonds in most cases are revenue bonds and generally
do not have the pledge of the credit of the issuer. The payment of the principal
and interest on such industrial revenue bonds is dependent solely on the ability
of the user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment. Short-term municipal obligations issued by states,
cities, municipalities or municipal agencies, include Tax Anticipation Notes,
Revenue Anticipation Notes, Bond Anticipation Notes, Construction Loan Notes and
Short-Term Discount Notes. Project Notes are instruments guaranteed by the
Department of Housing and Urban Development but issued by a state or local
housing agency. While the issuing agency has the primary obligation on Project
Notes, they are also secured by the full faith and credit of the United States.
<PAGE>
Municipal Obligations may also include "moral obligation" bonds, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation bonds is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
Note obligations with demand or put options may have a stated maturity
in excess of 13 months, but permit any holder to demand payment of principal
plus accrued interest upon a specified number of days' notice. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. The issuer of such notes normally has a
corresponding right, after a given period, to repay in its discretion the
outstanding principal of the note plus accrued interest upon a specific number
of days' notice to the bondholders. The interest rate on a demand note may be
based upon a known lending rate, such as a bank's prime rate, and be adjusted
when such rate changes, or the interest rate on a demand note may be a market
rate that is adjusted at specified intervals. The demand notes in which the
Tax-Exempt Cash Portfolio will invest are payable on not more than thirteen
months notice.
The yields of Municipal Obligations depend on, among other things,
general money market conditions, conditions in the Municipal Obligation market,
the size of a particular offering, the maturity of the obligation, and the
rating of the issue. The ratings of Moody's and S&P represent their opinions of
the quality of the Municipal Obligations rated by them. It should be emphasized
that such ratings are general and are not absolute standards of quality.
Consequently, Municipal Obligations with the same maturity, coupon and rating
may have different yields, while Municipal Obligations of the same maturity and
coupon, but with different ratings may have the same yield. It will be the
responsibility of the Advisor to appraise independently the fundamental quality
of the bonds held by the Tax-Exempt Cash Portfolio.
Municipal Obligations are sometimes purchased on a "when issued" basis,
which means the buyer has committed to purchase certain specified securities at
an agreed upon price when they are issued. The period between commitment date
and issuance date can be a month or more. It is possible that the securities
will never be issued and the commitment cancelled.
From time to time proposals have been introduced before Congress to
restrict or eliminate the Federal income tax exemption for interest on Municipal
Obligations. Similar proposals may be introduced in the future. If any such
proposal were enacted, it might restrict or eliminate the ability of the
Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios to achieve
their investment objectives. In that event the Funds' Board members and officers
would reevaluate the Tax-Exempt Cash, Muni Intermediate and New Jersey Muni
Portfolios' investment objectives and policies and consider recommending to
their shareholders changes in such objectives and policies.
<PAGE>
V. Foreign Investments
Investors should recognize that investing in foreign companies involves
certain special considerations which are not typically associated with investing
in U.S. companies. Because the stocks of foreign companies are frequently
denominated in foreign currencies, and because the Equity, International, Small
Capitalization Equity, International Fixed Income and Model Equity Portfolios
may temporarily hold uninvested reserves in bank deposits in foreign currencies,
the Equity, International, Small Capitalization Equity, International Fixed
Income and Model Equity Portfolios may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies. The investment
policies of the International and International Fixed Income Portfolios permit
the Portfolios to enter into forward foreign currency exchange contracts in
order to hedge the Portfolios' holdings and commitments against changes in the
level of future currency rates. Such contracts involve an obligation to purchase
or sell a specific currency at a future date at a price set at the time of the
contract.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in foreign
countries.
Although the Equity, International, Small Capitalization Equity, and
Model Equity Portfolios will endeavor to achieve most favorable execution costs
in its portfolio transactions, fixed commissions on many foreign stock exchanges
are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and
interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion of foreign withholding taxes will reduce
the income received from the foreign companies comprising the Equity,
International, Small Capitalization Equity, International Fixed Income and Model
Equity Portfolios.
<PAGE>
THE GLENMEDE PORTFOLIOS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A:
Financial Highlights for the period from commencement of
operations to October 31, 1994 for the Muni Intermediate
Portfolio and New Jersey Muni Portfolio.
Included in Part B:
None.
(b) Exhibits
1. Master Trust Agreement of Registrant dated March 3, 1992.
2. By-Laws of Registrant dated March 3, 1992.
3. Not Applicable.
4. (a) Specimen Share Certificate for shares of the Muni Intermediate
Portfolio is hereby incorporated by reference to Exhibit 4 to
Post-Effective Amendment No. 1 to the Registration Statement.
(b) Specimen Share Certificate for shares of the New Jersey Muni
Portfolio is hereby incorporated by reference to Exhibit 4 to
Post-Effective Amendment No. 4 to the Registration Statement
("Post-Effective Amendment No. 4").
(c) Specimen Share Certificate for shares of the Maryland Muni
Portfolio is hereby incorporated by reference to Exhibit 4 to
Post-Effective Amendment No. 4.
5. (a) Investment Advisory Agreement between Registrant and The
Glenmede Trust Company dated June 5, 1992.
(b) Supplement dated March 2, 1993 to Investment Advisory Agreement
relating to the New Jersey Muni and Maryland Muni Portfolio's
between Registrant and The Glenmede Trust Company.
(c) Amendment No. 1 dated September 13, 1994 to Investment Advisory
Agreement between Registrant and The Glenmede Trust Company.
6. Distribution Agreement between Registrant and Armata Financial
Corp. dated July 1, 1995.
7. Not Applicable.
8. (a) Custody Agreement between Registrant and The Chase Manhattan
Bank, N.A. dated May 1, 1995.
<PAGE>
(b) Amendment dated May 1, 1995 to Custody Agreement between
Registrant and The Chase Manhattan Bank, N.A. dated May 1, 1995.
9. (a) Master Services Agreement between Registrant and Investment
Company Capital Corp. dated July 1, 1995.
(b) Amended and Restated Shareholder Servicing Plan dated December
6, 1995 and Form of Shareholder Servicing Agreement attached
thereto as Appendix A.
(c) Amended and Restated Shareholder Servicing Agreement dated
December 6, 1995 between Registrant and The Glenmede Trust
Company.
10. Opinion of Counsel as to Legality of Securities Being Registered
to be filed pursuant to Rule 24f-2 as part of Registrant's Rule
24f-2 Notice on Form 24f-2.
11. (a) Consent of Drinker Biddle & Reath.
12. Not Applicable.
13. (a) Purchase Agreement between Registrant and The Glenmede Trust
Company is hereby incorporated by reference to Exhibit 13 to the
Registration Statement.
(b) Purchase Agreement between Registrant and The Glenmede Trust
Company relating to the New Jersey Muni and Maryland Muni
Portfolios dated November 1, 1993.
14. Not Applicable.
15. Not Applicable.
16. Not Applicable.
17. Financial Data Schedule of Registrant.
18. Not Applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
Registrant is not controlled by or under common control with any
person.
Item 26. Number of Record Holders of Securities
As of November 30, 1995, the number of record holders of
securities was:
New Jersey Muni Portfolio - 1
Muni Intermediate Portfolio - 1
<PAGE>
Item 27. Indemnification
Reference is made to Article VI of The Glenmede Portfolios' Master
Trust Agreement incorporated by reference as Exhibit 1. Insofar as
indemnification for liability arising under the Securities Act of 1933 may
be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event a claim
for indemnification against such liabilities ( other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisor
Reference is made to the caption of "Investment Advisor" in the
Prospectus in Part A of this Registration Statement and "Investment
Advisory and Other Services" in Part B of this Registration Statement.
Listed below are the directors of The Glenmede Corporation:
Susan W. Catherwood Robert G. Dunlop
Thomas G. Langfitt, M.D. Robert E. McDonald
J. Howard Pew, II J.N. Pew, III
J. N. Pew, IV R. Anderson Pew
Ethel Benson Wister
Item 29. Principal Underwriters.
(a) In addition to The Glenmede Portfolios, Armata Financial Corp.
("Armata") currently acts as distributor for The Glenmede Fund, Inc., Total
Return U.S. Treasury Fund, Inc., Managed Municipal Fund, Inc. and North American
Government Bond Fund, Inc.. Armata is registered with the Securities and
Exchange Commission as a broker-dealer and is a member of the National
Association of Securities Dealers. Armata is a subsidiary of Alex. Brown & Sons
Incorporated ("Alex. Brown"). Alex. Brown is a registered broker-dealer and a
member of the New York Stock Exchange.
(b)
Position and Position and
Name and Principal Offices with Offices with
Business Address Armata Registrant
------------------ ------------ ------------
Jack S. Griswold Chairman and None
Director
F. Barton Harvey, Jr. Director None
John M. Prugh President and None
Director
E. Robert Kent Director None
Peter E. Bancroft Secretary None
Timothy M. Gisriel Treasurer None
(c) Not applicable.
<PAGE>
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
will be maintained at the offices of:
The Glenmede Trust Company
One Liberty Place
1650 Market Street, Suite 1200
Philadelphia, Pennsylvania 19103
(records relating to its function as investment advisor)
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
(records relating to its function as custodian)
Investment Company Capital Corp.
135 East Baltimore Street
Baltimore, Maryland 21202
(records relating to its function as administrator,
transfer agent and dividend disbursing agent)
Armata Financial Corp.
135 East Baltimore Street
Baltimore, Maryland 21202
(records relating to its function as distributor)
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
(Registrant's minute books)
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Registrant undertakes to comply with the provisions of Section
16(c) of the 1940 Act in regard to shareholders' right to call a meeting of
shareholders for the purpose of voting on the removal of trustees and to assist
in shareholder communications in such matters, to the extent required by law.
Specifically, the Registrant will, if requested to do so by the holders of at
least 10% of the Registrant's outstanding voting shares, call a meeting of
shareholders for the purpose of voting upon the question of the removal of
trustees, and the Registrant will assist in shareholder communications as
required by Section 16(c) of the 1940 Act.
(b) Registrant undertakes to furnish to each person to whom a
prospectus is delivered, a copy of Registrant's latest annual report to
shareholders, upon request and without delay.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, The Glenmede Portfolios has duly
caused this Post-Effective Amendment No. 6 to its Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Philadelphia, and Commonwealth of Pennsylvania on the 29th day of December,
1995.
THE GLENMEDE PORTFOLIOS
By: /s/ John W. Church, Jr.
---------------------------
John W. Church, Jr.
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 6 to the Registration Statement of The
Glenmede Portfolios has been signed by the following persons in the capacities
and on the date indicated.
Signature Title Date
--------- ------ ----
/s/ John W. Church, Jr. Chairman, December 29, 1995
- ---------------------------- Chief Executive
John W. Church, Jr. Officer
/s/ H. Franklin Allen, Ph.D. Trustee December 29, 1995
- ----------------------------
H. Franklin Allen, Ph.D.
/s/ Willard S. Boothby, Jr. Trustee December 29, 1995
- ---------------------------
Willard S. Boothby, Jr.
/s/ Francis J. Palamara Trustee December 29, 1995
- -----------------------
Francis J. Palamara
/s/ G. Thompson Pew, Jr. Trustee December 29, 1995
- ------------------------
G. Thompson Pew, Jr.
/s/ Joseph A. Finelli Treasurer December 29, 1995
- ---------------------
Joseph A. Finelli
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
(1) Master Trust Agreement of Registrant
dated March 3, 1992.
(2) By-Laws of Registrant dated March 3,
1992.
(5) (a) Investment Advisory Agreement between
Registrant and The Glenmede Trust
Company dated June 5, 1992.
(b) Supplement dated March 2, 1993 to
Investment Advisory Agreement relating
to the New Jersey Muni and Maryland Muni
Portfolio's between Registrant and The
Glenmede Trust Company.
(c) Amendment No. 1 dated September 13, 1994
to Investment Advisory Agreement between
Registrant and The Glenmede Trust
Company.
(6) Distribution Agreement between
Registrant and Armata Financial Corp.
dated July 1, 1995.
(8) (a) Custody Agreement between Registrant and
The Chase Manhattan Bank, N.A. dated May
1, 1995.
(b) Amendment to Custody Agreement between
Registrant and The Chase Manhattan Bank,
N.A. dated May 1, 1995.
(9) (a) Master Services Agreement between
Registrant and Investment Company
Capital Corp. dated July 1, 1995.
(b) Amended and Restated Shareholder
Servicing Plan dated December 6, 1995
and Form of Shareholder Servicing
Agreement attached thereto as Appendix
A.
<PAGE>
(c) Amended and Restated Shareholder
Servicing Agreement dated December 6,
1995 between Registrant and The Glenmede
Trust Company.
(11) (a) Consent of Drinker Biddle & Reath.
(13) (b) Purchase Agreement between Registrant
and The Glenmede Trust Company relating
to the New Jersey Muni and Maryland Muni
Portfolios dated November 1, 1993.
(27) Financial Data Schedule of Registrant.
-2-
<PAGE>
Exhibit (1)
THE GLENMEDE PORTFOLIOS
MASTER TRUST AGREEMENT
MARCH 3, 1992
<PAGE>
THE GLENMEDE PORTFOLIOS
CROSS-REFERENCE SHEET
Pursuant to CMR 116.0:
116.03 (a) Name of organization or trust:
THE GLENMEDE PORTFOLIOS
(b) Date of organization:
March 3, 1992
(c) Names and address of the trustees:
Patricia L. Bickimer
One Exchange Place - 4th Floor
Boston, MA 02109
Peter Meenan
One Exchange Place - 11th Floor
Boston, MA 02109
(d) Original signatures of all trustees:
See page 25
(e) Principal place of business:
Bellevue Park Corporate Center
103 Bellevue Parkway
Wilmington, DE 19809
(f) Statement that beneficial interest is divided into
transferable certificates of participation or shares:
See Section 4.1, pages 11-12.
(g) Ability to merge:
See Section 7.2, page 23.
<PAGE>
THE GLENMEDE PORTFOLIOS
MASTER TRUST AGREEMENT
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I NAME AND DEFINITIONS........................................................................ 1
Section 1.1 Name............................................................................. 1
Section 1.2 Definitions...................................................................... 1
(a) "Trust"..................................................................... 1
(b) "Trustees".................................................................. 1
(c) "Shares".................................................................... 2
(d) "Series".................................................................... 2
(e) "Shareholder"............................................................... 2
(f) "1940 Act" ................................................................. 2
(g) "Commission"................................................................ 2
(h) "Declaration of Trust"...................................................... 2
(i) "By-Laws"................................................................... 2
ARTICLE II PURPOSE OF TRUST........................................................................... 2
ARTICLE III THE TRUSTEES.............................................................................. 2
Section 3.1 Number, Designation, Election, Term, etc......................................... 2
(a) Initial Trustees............................................................ 2
(b) Number...................................................................... 2
(c) Election and Term........................................................... 3
(d) Resignation and Retirement.................................................. 3
(e) Removal..................................................................... 3
(f) Vacancies................................................................... 3
(g) Effect of Death, Resignation, etc........................................... 4
(h) No Accounting............................................................... 4
Section 3.2 Powers of Trustees............................................................... 4
(a) Investments................................................................. 5
(b) Disposition of Assets....................................................... 5
(c) Ownership Powers............................................................ 5
(d) Subscription................................................................ 5
(e) Form of Holding............................................................. 5
(f) Reorganization, etc......................................................... 6
(g) Voting Trusts, etc.......................................................... 6
(h) Compromise.................................................................. 6
(i) Partnerships, etc........................................................... 6
(j) Borrowing and Security...................................................... 6
(k) Guarantees, etc............................................................. 6
(l) Insurance................................................................... 6
Section 3.3 Certain Contracts................................................................ 7
(a) Advisory.................................................................... 7
(b) Administration.............................................................. 8
(c) Distribution................................................................ 8
(d) Custodian and Depository.................................................... 8
(e) Transfer and Dividend Disbursing Agency..................................... 8
(f) Shareholder Servicing....................................................... 8
-i-
<PAGE>
(g) Accounting.................................................................. 8
Section 3.4 Payment of Trust Expenses and
Compensation of Trustees.................................................... 9
Section 3.5 Ownership of Assets of the Trust................................................. 10
Section 3.6 Power to Carry Out Trust's Purposes;
Presumptions................................................................ 11
Section 3.7 Determinations by Trustees....................................................... 11
ARTICLE IV SHARES..................................................................................... 12
Section 4.1 Description of Shares............................................................ 12
Section 4.2 Establishment and Designation of
Sub-Trusts.................................................................. 13
(a) Assets Belonging to Sub-Trusts.............................................. 13
(b) Liabilities Belonging to Sub-Trusts......................................... 14
(c) Dividends................................................................... 14
(d) Liquidation................................................................. 15
(e) Voting...................................................................... 15
(f) Redemption by Shareholder................................................... 15
(g) Redemption by Trust......................................................... 16
(h) Net Asset Value............................................................. 16
(i) Transfer.................................................................... 17
(j) Equality.................................................................... 17
(k) Fractions................................................................... 17
(l) Conversion Rights........................................................... 17
Section 4.3 Ownership of Shares.............................................................. 17
Section 4.4 Investments in the Trust......................................................... 18
Section 4.5 No Pre-emptive Rights............................................................ 18
Section 4.6 Status of Shares and Limitation of
Personal Liability.......................................................... 18
ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS.................................................... 18
Section 5.1 Voting Powers.................................................................... 18
Section 5.2 Meetings......................................................................... 19
Section 5.3 Record Dates..................................................................... 20
Section 5.4 Quorum and Required Vote......................................................... 20
Section 5.5 Action by Written Consent........................................................ 20
Section 5.6 Inspection of Records............................................................ 20
Section 5.7 Additional Provisions............................................................ 21
ARTICLE VI LIMITATION OF LIABILITY; INDEMNIFICATION................................................... 21
Section 6.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice................................................... 21
Section 6.2 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety................................................... 21
Section 6.3 Indemnification of Shareholders.................................................. 22
Section 6.4 Indemnification of Trustees, Officers,
etc......................................................................... 22
Section 6.5 Compromise Payment............................................................... 23
Section 6.6 Indemnification Not Exclusive, etc............................................... 24
Section 6.7 Liability of Third Persons Dealing with
Trustees.................................................................... 24
-ii-
<PAGE>
ARTICLE VII MISCELLANEOUS............................................................................. 24
Section 7.1 Duration and Termination of Trust................................................ 24
Section 7.2 Reorganization................................................................... 25
Section 7.3 Amendments....................................................................... 25
Section 7.4 Resident Agent................................................................... 26
Section 7.5 Filing of Copies; References; Headings........................................... 26
Section 7.6 Trust Not a Partnership.......................................................... 26
Section 7.7 Applicable Law................................................................... 27
Section 7.8 Name of Trust.................................................................... 27
</TABLE>
-iii-
<PAGE>
THE GLENMEDE PORTFOLIOS
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
3rd day of March, 1992, by the Trustees hereunder, and by the holders of shares
of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business
of an investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust hereunder,
all in accordance with the provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust or Sub-Trusts created
hereunder as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "The Glenmede
Portfolios" and the Trustees shall conduct the business of the Trust under that
name or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Trust Agreement, as amended from time to time, inclusive of
each and every Sub-Trust established hereunder;
(b) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III;
<PAGE>
(c) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust and each Sub-Trust of the Trust (as
the context may require) shall be divided from time to time;
(d) "Series" refers to Series of Shares established and
designated under or in accordance with the provisions of Article IV, each of
which Series shall be a Sub-Trust of the Trust;
(e) "Shareholder" means a record owner of Shares;
(f) "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from time to time;
(g) The term "Commission" shall have the meaning given it in
the 1940 Act;
(h) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time; and
(i) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon the execution of this Declaration
of Trust or a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, each of Peter Meenan and
Patricia L. Bickimer, shall become a Trustee hereof and of each Sub-Trust
hereunder.
(b) Number. The Trustees serving as such, whether named above
or hereafter becoming a Trustee, may increase or decrease (to not less than two)
the number of Trustees to a number other than the number theretofore determined.
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No increase in the number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term, but the number of
Trustees may be decreased in conjunction with the removal of a Trustee pursuant
to subsection (e) of this Section 3.1
(c) Election and Term. The Trustees shall be elected by the
Shareholders of the Trust at the first meeting of Shareholders following the
initial public offering of shares of the Trust. Each Trustee, whether named
above or hereafter becoming a Trustee, shall serve as a Trustee of the Trust and
of each Sub-Trust hereunder during the lifetime of this Trust and until its
termination as hereinafter provided except as such Trustee sooner dies, resigns
or is removed. Subject to Section 16(a) of the 1940 Act, the Trustees may elect
their own successors and may, pursuant to Section 3.1(f) hereof, appoint
Trustees to fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign his
trust or retire as a Trustee, by written instrument signed by him and delivered
to the other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause
at any time: (i) by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date upon which such
removal shall become effective; or (ii) by vote of Shareholders holding not less
than two-thirds of the Shares then outstanding, cast in person or by proxy at
any meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding and
filed with the Trust's Custodian. Any such removal shall be effective as to the
Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation the death, resignation,
retirement, removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the other Trustees may (but so long as
there are at least two remaining Trustees, need not unless required by the 1940
Act) be filled by a majority of the remaining Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, through the appointment in writing
of such other person as such remaining Trustees in their discretion shall
determine and such appointment shall be effective upon the written acceptance of
the person named therein to serve as a Trustee and agreement by such person to
be bound by the provisions of this Declaration of Trust, except that any such
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appointment in anticipation of a vacancy to occur by reason of retirement,
resignation, or increase in number of Trustees to be effective at a later date
shall become effective only at or after the effective date of said retirement,
resignation, or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted such appointment and shall have agreed in writing
to be bound by this Declaration of Trust and the appointment is effective, the
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust or any Sub-Trust hereunder or to
revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940
Act or under circumstances which would justify his removal for cause, no person
ceasing to be a Trustee as a result of his death, resignation, retirement,
removal or incapacity (nor the estate of any such person) shall be required to
make an accounting to the Shareholders or remaining Trustees upon such
cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may from time to time in accordance with the
provisions of Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust to
operate as a separate and distinct investment medium and with separately defined
investment objectives and policies and distinct investment purpose; they may as
they consider appropriate elect and remove officers and appoint and terminate
agents and consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the compensation of all
of the foregoing; they may appoint from their own number, and terminate, any one
or more committees consisting of two or more Trustees, including without implied
limitation an executive committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in accordance with
Section 3.3 they may employ one or more advisers, administrators, distributors,
depositories, and custodians and other service providers and may authorize any
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depository or custodian to employ subcustodians or agents and to deposit all or
any part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, service providers, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
depository, custodian, transfer, dividend disbursing agent, and other service
provider or any other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the conduct
of the business and affairs of the Trust, including without implied limitation
the power and authority to act in the name of the Trust and of the Trustees, to
sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other
property, and to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in regard to
investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets of
the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities, debt instruments
or property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of
subscription or otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust or of any
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Sub-Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any
plan for the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument which is or was held in the Trust; to
consent to any contract, lease, mortgage,, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect to any
security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee, depository, voting
trustee or otherwise, and in that connection to deposit any security or debt
instrument with, or transfer any security or debt instrument to, any committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any Sub-Trust of any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general
or limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage
and pledge the assets of the Trust or any part thereof to secure obligations
arising in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of
any notes or other obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and to mortgage
and pledge the Trust property or any part thereof to secure any of or all such
obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or independent
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contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
on behalf of the Trust or any Sub-Trust may be taken by a majority of the
Trustees present at a meeting of Trustees where a quorum is present (a quorum
consists of at least a majority of the Trustees then in office), within or
without Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other types of organizations, or individuals
("Contracting Party"), to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or on behalf
of the Trust and/or any Sub-Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the Trustees with respect
to the investments of the Trust or of the assets belonging to any Sub-Trust of
the Trust (as that phrase is defined in subsection (a) of Section 4.2), to
manage such investments and assets, including, without limitation, making
investment decisions with respect thereto and placing purchase and sale orders
for portfolio transactions relating to such investments and assets;
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(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust, to supervise all or any part of the
operations of the Trust and each Sub-Trust, and to provide all or any part of
the administrative and clerical personnel, office space and office equipment and
services appropriate for the efficient administration and operations of the
Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and
each Sub-Trust, to be principal underwriter of such Shares, and/or to act as
agent of the Trust and each Sub-Trust in the sale of Shares and the acceptance
or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and each Sub-Trust and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain
records of the ownership of outstanding Shares, the issuance and redemption and
the transfer thereof, and to disburse any dividends declared by the Trustees and
in accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to
the relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub-contractual arrangements relative to
any of the matters referred to in Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees, or
officers of the Trust is a shareholder, director, officer,
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partner, trustee, employee, manager, adviser, principal underwriter or
distributor or agent of or for any Contracting Party, or of or for any
parent or affiliate of any Contracting Party or that the Contracting
Party or any parent or affiliate thereof is a Shareholder or has an
interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract
providing for the rendering of any similar services to one or more
other corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or have other business or
interests, shall not affect the validity of any contract for the
performance and assumption of services, duties and responsibilities to,
for or of the Trust or any Sub-Trust and/or the Trustees or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the
Trust, any Sub-Trust or its Shareholders, provided that in the case of
any relationship or interest referred to in the preceding clause (i) on
the part of any Trustee or officer of the Trust either (x) the material
facts as to such relationship or interest have been disclosed to or are
known by the Trustees not having any such relationship or interest and
the contract involved is approved in good faith by a majority of such
Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of
the Trustees), (y) the material facts as to such relationship or
interest and as to the contract have been disclosed to or are known by
the Shareholders entitled to vote thereon and the contract involved is
specifically approved in good faith by vote of the Shareholders, or (z)
the specific contract involved is fair to the Trust as of the time it
is authorized, approved or ratified by the Trustees or by the
Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub- Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts that may be established and designated pursuant to
Article IV, as the Trustees deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust or any Sub-Trust,
or in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, Shareholder servicing agent, and
such other agents, consultants, service providers and independent contractors
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and such other expenses and charges as the Trustees may deem necessary or proper
to incur. Without limiting the generality of any other provision hereof, the
Trustees shall be entitled to reasonable compensation from the Trust for their
services as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees
and shall be held separately and apart from any assets, now or hereafter held in
any capacity other than as Trustee hereunder, by the Trustees, including without
limitation any successor Trustees. Legal title to all the assets of the Trust
shall be vested in the Trustees as joint tenants except that the Trustees shall
have power to cause legal title to any assets of the Trust to be held by or in
the name of one or more of the Trustees, or in the name of the Trust, or in the
name of any other person as nominee, on such terms as the Trustees may
reasonably determine. The right, title and interest of the Trustees in the
assets of the Trust shall vest automatically in each person who may hereafter
become a Trustee, upon the resignation, removal or death of a Trustee, such
Trustee shall automatically cease to have any right, title or interest in any of
the assets of the Trust, and the right, title and interest of such Trustee in
the assets of the Trust shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective regardless of whether
conveyancing documents have been executed and delivered. Except to the extent
otherwise required by Articles IV and V hereof, no Shareholder shall be deemed
to have severable ownership in any individual asset of the Trust or any right of
partition of possession thereof, or shall be called upon to assume any loss of
the Trust nor can he be called upon to assume any loss of the Trust or suffer an
assessment of any kind by virtue of his ownership of Shares, but each
Shareholder shall have a proportionate undivided beneficial interest in the
assets belonging to a particular class or classes of Shares to the extent
provided in Articles IV and V. The ownership of Trust property of every
description and the right to conduct any business hereinbefore described shall
be vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to assume any losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal property giving only
the rights specifically set forth in this Agreement. Shares shall not entitle
any holder thereof to preference, preemptive, appraisal, conversion or exchange
rights, except as the Trustees may determine pursuant to Articles IV and V
hereof.
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Section 3.6 Power to Carry Out Trust's Purposes; Presumptions. The
Trustees shall have power to carry out any and all acts consistent with the
Trust's purposes through branches and offices both within and without the
Commonwealth of Massachusetts, in any and all states of the United States of
America, in the District of Columbia, and in any and all commonwealths,
territories, dependencies, possessions, agencies or instrumentalities of the
United States of America and of foreign governments, and to do all such other
things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Agreement, the presumption shall be in
favor of a grant of power to the Trustees. The enumeration of any specific power
herein shall not be construed as limiting the aforesaid power. The Trustees
shall not be required to obtain any court order to deal with any Trust property.
Section 3.7 Determinations by Trustees. Any determinations made in good
faith and, so far as accounting matters are involved in accordance with
generally accepted accounting principles, by or pursuant to the direction of the
Trustees as to the amount and value of assets, obligations or liabilities of the
Trust or any Sub-Trust, as to the amount of net income the Trust or any Sub-
Trust from dividends and interest for any period of amounts at any time legally
available for the payment of dividends, as to the amount of any reserves or
charges set up and the proprietary thereof, as to the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which such reserves
or charges shall have been created shall have been paid or discharged or shall
be then or thereafter required to be paid or discharged), as to the value of any
security owned by the Trust or any Sub-Trust as to the allocation of any assets
or liabilities to any Sub-Trust as to the times at which Shares shall be deemed
to be outstanding or no longer outstanding, or as to any other matters relating
to the issuance, sale, redemption or other acquisition or disposition of
securities or Shares, and any reasonable determination made in good faith by the
Trustees as to whether any transaction constitutes a purchase of securities on
"margin," a sale of securities "short," or any underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the public
distribution of, any securities, shall be final and conclusive, and shall be
binding upon the Trust and all Shareholders, past, present and future, and
Shares are issued and sold on the condition and understanding, evidenced by the
purchase of Shares or acceptance of Share certificates, that any and all such
determinations shall be binding as aforesaid.
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ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all with $.001 par value per share and of one
class, but the Trustees shall have the authority from time to time to divide the
class of Shares into two or more Series of Shares (each of which Series of
Shares shall be a separate and distinct Sub-Trust of the Trust, including
without limitation those Sub-Trusts specifically established and designated in
section 4.2), as they deem necessary or desirable. Each Sub-Trust shall be
deemed to be a separate trust established under, and subject to the terms of,
this Declaration of Trust. The Trustees shall have exclusive power without the
requirement of shareholder approval to establish and designate such separate and
distinct Sub-Trusts, and to fix and determine the relative rights and
preferences as between the shares of the separate Sub-Trusts as to right of
redemption and the price, terms and manner of redemption, special and relative
rights as to dividends and other distributions and on liquidation, sinking or
purchase fund provisions, conversion rights, and conditions under which the
several Sub-Trusts shall have separate voting rights or no voting rights.
The number of authorized Shares and the number of Shares of each
Sub-Trust that may be issued is unlimited, and the Trustees may issue Shares of
any Sub-Trust for such consideration and on such terms as they may determine (or
for no consideration if pursuant to a Share dividend or split-up), all without
action or approval of the Shareholders. All Shares when so issued on the terms
determined by the Trustees shall be fully paid and non-assessable (but may be
subject to mandatory contribution back to the Trust as provided in subsection
(h) of Section 4.2). The Trustees may classify or reclassify any unissued Shares
or any Shares previously issued and reacquired of any Sub-Trust into one or more
Sub-Trusts that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust as reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust in addition to that
established and designated in Section 4.2 shall be effective upon the execution
by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Sub-Trust, or as otherwise provided in such instrument. At any
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time that there are no Shares outstanding of any particular Sub-Trust previously
established and designated the Trustees may by an instrument executed by a
majority of their number abolish that Sub-Trust and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust of the Trust to the same extent as if such person were
not a Trustee, officer or other agent of the Trust; and the Trust may issue and
sell or cause to be issued and sold and may purchase Shares of any Sub-Trust
from any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or purchase
of Shares of such Sub-Trust generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without
limiting the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Sub-Trusts, the Trustees hereby establish and designate a
Sub-Trust, named the "Muni Intermediate Portfolio". The Shares of the Muni
Intermediate Portfolio and any Shares of any further Sub-Trusts that may from
time to time be established and designated by the Trustees shall (unless the
Trustees otherwise determine with respect to some further Sub-Trust at the time
of establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
be held by the Trustees in trust for the benefit of the holders of Shares of
that Sub-Trust and shall irrevocably belong to that Sub-Trust for all purposes,
and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items
allocated to that Sub-Trust as provided in the following sentence, are herein
referred to as "assets belonging to" that Sub-Trust. In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular Sub-Trust
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(collectively "General Items"), the Trustees shall allocate such General Items
to and among any one or more of the Sub-Trusts established and designated from
time to time in such manner and on such basis as they, in their sole discretion,
deem fair and equitable; and any General items so allocated to a particular
Sub-Trust shall belong to that Sub-Trust. Each such allocation by the Trustees
shall be conclusive and binding upon the Shareholders of all Sub-Trusts for all
purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging
to each particular Sub-Trust shall be charged with the liabilities in respect of
that Sub-Trust and all expenses, costs, charges and reserves attributable to
that Sub-Trust, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging to any
particular Sub-Trust shall be allocated and charged by the Trustees to and among
any one or more of the Sub-Trusts established and designated from time to time
in such manner and on such basis as the Trustees in their sole discretion deem
fair and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust are herein referred to as "liabilities
belonging to" that Sub-Trust. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Sub-Trusts for all purposes. Any creditor of any Sub-Trust
may look only to the assets of that Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) Dividends. Dividends and Distributions on Shares of a particular
Sub-Trust may be paid with such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine, to the
holders of Shares of that Sub-Trust, from such of the income and capital gains,
accrued or realized, from the assets belonging to that Sub-Trust, as the
Trustees may determine, after providing for actual and accrued liabilities
belonging to that Sub-Trust. All dividends and distributions on Shares of a
particular Sub-Trust shall be distributed pro rata to the holders of Shares of
that Sub-Trust in proportion to the number of Shares of that Sub-Trust held by
such holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
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order and/or payment have not been received by the time or times established by
the Trustees under such program or procedures. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees may have
in effect at the time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder. Any such dividend
or distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) of Section 4.2.
(d) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Sub-Trust that has been
established and designated shall be entitled to receive, when and as declared by
the Trustees, the excess of the assets belonging to that Sub-Trust over the
liabilities belonging to that Sub-Trust. The assets so distributable to the
Shareholders of any particular Sub-Trust shall be distributed among such
Shareholders in proportion to the number of Shares of that Sub-Trust held by
them and recorded on the books of the Trust. The liquidation of any particular
Sub-Trust may be authorized by vote of a majority of the Trustees then in office
subject to the approval of a majority of the outstanding voting Shares of that
Sub-Trust, as defined in the 1940 Act.
(e) Voting. On each matter submitted to a vote of the
Shareholders, each holder of a Share of each Sub-Trust shall be entitled to one
vote for each whole Share and to a proportionate fractional vote for each
fractional Share standing in his name on the books of the Trust. The Trustees
shall cause each matter required or permitted to be voted upon it a meeting or
by written consent of Shareholders to be submitted to a vote of all classes of
outstanding Shares entitled to vote thereon (irrespective of class), unless the
1940 Act or other applicable law or regulations require that the actions of the
Shareholders be taken by a separate vote of one or more classes, or the Trustees
determine that any matter to be submitted to a vote of Shareholders affects only
the rights or interests of one or more (but not all) classes of outstanding
Shares, in which case only the Shareholders of the class or classes so affected
shall be entitled to vote thereon.
(f) Redemption by Shareholder. To the extent of the assets of the
particular Sub-Trust legally available for such redemptions, each holder of
Shares of a particular Sub-Trust shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of his
Shares of that Sub-Trust at a redemption price equal to the net asset value per
Share of that Sub-Trust next determined in accordance with subsection (h) of
this Section 4.2 after the Shares are properly tendered for redemption. Payment
of the redemption price shall be in cash; provided, however, that if the
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Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may
make payment wholly or partly in securities or other assets belonging to the
Sub-Trust of which the Shares being redeemed are part at the value of such
securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust to require the Trust to redeem Shares of that Sub-Trust during any
period or at any time when and to the extent permissible under the 1940 Act. The
Trustees shall establish such rules and procedures as they deem appropriate for
the redemption of Shares, provided that all redemptions shall be in accordance
with the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust that has
been established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.2: (a) at any
time, if the Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of the Shares of
the Trust or any Sub-Trust thereof, or (b) upon such other conditions as may
from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust with respect to maintenance of Shareholder
accounts of a minimum amount. Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other than to receive
payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any
Sub-Trust shall be the quotient obtained by dividing the value of the net assets
of that Sub-Trust (being the value of the assets belonging to that Sub-Trust
less the liabilities belonging to that Sub-Trust) by the total number of Shares
of that Sub-Trust outstanding, all determined in accordance with the methods
and procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declaration of income attributable to that Sub-Trust as dividends payable in
Additional cash or Shares of that Sub-Trust at the designated constant dollar
amount and for the handling of any losses attributable to that Sub-Trust. Such
procedures may provide that in the event of any loss each Shareholder shall be
deemed to have contributed to the capital of the Trust attributable to that
Sub-Trust his pro rata portion of the total number of Shares required to be
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cancelled in order to permit the net asset value per Share of that Sub-Trust to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each Shareholder of the Trust shall be deemed to have agreed, by his
investment in any Sub-Trust with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust shall be
transferable, but transfers of Shares of a particular Sub-Trust will be recorded
on the Share transfer records of the Trust applicable to that Sub-Trust only at
such times as Shareholders shall have the right to require the Trust to redeem
Shares of that Sub-Trust and at such other times as may be permitted by the
Trustees.
(j) Equality. All Shares of each particular Sub-Trust shall
represent an equal proportionate interest in the assets belonging to that
Sub-Trust (subject to the liabilities belonging to that Sub-Trust), and each
Share of any particular Sub-Trust shall be equal to each other Share of that
Sub-Trust; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust. The
Trustees may from time to time divide or combine the Shares of any particular
Sub-Trust into a greater or lesser number of Shares of that Sub-Trust without
thereby changing the proportionate beneficial interest in the assets belonging
to that Sub-Trust or in any way affecting the rights of Shares of any other
Sub-Trust.
(k) Fractions. Any fractional Share of any Sub-Trust, if any
such fractional Share is outstanding, shall carry proportionately all the rights
and obligations of a whole Share of that Sub-Trust, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that holders of Shares of any Sub-Trust shall have the right to convert said
Shares into Shares of one or more other Sub-Trust in accordance with such
requirements and procedures as may be established by the Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
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determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Shares certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the lumber of
Shares of each Sub-Trust held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust and each Sub-Trust thereof from such persons and on
such terms and for such consideration, not inconsistent with the provisions of
the 1940 Act, as they from time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian, transfer agent or other
person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said decedent under
this Trust. Ownership of Shares shall not entitle the Shareholder to any title
in or to the whole or any part of the Trust property or right to call for a
partition or division of the same or for an accounting, nor shall the ownership
of Shares constitute the Shareholders partners. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally any Shareholder, nor except as specifically provided herein
to call upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
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(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Sub-Trust
to the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or any Sub-Trust thereof or the Shareholders (provided, however,
that a Shareholder of a particular Sub-Trust shall not be entitled to a
derivative or class action on behalf of any other Sub-Trust (or Shareholder of
any other Sub-Trust) of the Trust) and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than 10% of
the Shares then outstanding. If the Trustees fail to call or give notice of any
meeting of Shareholders for a period of 30 days after written application by
Shareholders holding at least 10% of the Shares then outstanding requesting a
meeting be called for any other purpose requiring action by the Shareholders as
provided herein or in the By-Laws, then Shareholders holding at least 10% of the
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Shares then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 90 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
majority of the Shares voted, at a meeting of which a quorum is present shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is required or permitted by any provision of the 1940 Act or
other applicable law or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the ByLaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
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stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any. Sub-Trust nor the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite to the effect that the same wits executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, or the particular Sub-Trust in
question, as the case may be, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
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and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent and other service provider of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee; (b) the Trustees may
take advice of counsel or other experts with respects the meaning and operation
of this Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and any other service provider,
officer, partner or responsible employee of a Contracting Party appointed by the
Trustees pursuant to Section 3.3. The Trustees as such shall not be required to
give any bond or surety or any other security for the performance of their
duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, said Sub-Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of said
Sub-Trust estate to be held harmless from and indemnified against all loss and
expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise [hereinafter referred to as
a "Covered Person"]) against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
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court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person had acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office (hereinafter "Disabling Conduct"). A determination that the
Covered Person is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative proceeding
against a Covered Person for insufficiency of evidence of Disabling Conduct, or
(iii) a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Sub-Trust in question
in advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken to repay the amounts so
paid to the Sub-Trust in question if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VI and (i)
the Covered Person shall have provided security for such undertaking or shall
have given a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such indemnification, (ii)
the Trust shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the disinterested Trustees who are
not a party to the proceeding, or an independent legal counsel in a written
opinion, shall have determined, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not a party to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
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by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened.
Nothing contained in this article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of any person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration,
modification or termination with respect to any Sub-Trust shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office subject to a favorable vote of a majority of the
outstanding voting securities, as defined in the 1940 Act, Shares of each
Sub-Trust voting separately by Sub-Trust.
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Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trust may merge or consolidate with any
other corporation, partnership, association, trust or other organization and the
Trustees may sell, convey, and transfer the assets of the Trust, or the assets
belonging to any one or more Sub-Trusts, to another trust, partnership,
association or corporation organized under the laws of any state of the United
States, or to the Trust to be held as assets belonging to another Sub-Trust, in
exchange for cash, shares or other securities or assets (including, in the case
of a transfer to another Sub-Trust of the Trust, Shares of such other Sub-
Trust) with such transfer being made subject to, or with the assumption by the
transferee of, the liabilities belonging to each Sub-Trust the assets of which
are so transferred; provided, however, that no assets belonging to any
particular Sub-Trust shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of that Sub-Trust. Any such consolidation or merger
shall require approval by the affirmative vote of the holders of a majority of
the outstanding voting Shares, as defined in the 1940 Act, of the Trust (or each
Sub-Trust affected thereby, as the case may be), except that such affirmative
vote of the holders of Shares shall not be required if the Trust (or Sub-Trust
affected thereby, as the case may be) shall be the survivor of such
consolidation or merger.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act, by
an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees). Any
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amendment to this Declaration of Trust that adversely affects the rights of
Shareholders may be adopted at any time by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to a vote
of a majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding a majority
of the Shares entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a part
of such instrument) executed by a Trustee or officer of the Trust to the effect
that such amendment has been duly adopted. Notwithstanding any other provision
hereof, this Agreement may not be amended in any manner whatsoever that would
impair the exemption from personal liability of the Trustees and Shareholders of
the Trust or that would permit an assessment upon any Shareholder.
Section 7.4 Resident Agent. The Trust may appoint and maintain a
resident agent in the Commonwealth of Massachusetts.
Section 7.5 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts and with the Boston City Clerk,
as well as any other governmental office where such filing may from time to time
be required, but the failure to make any such filing shall not impair the
effectiveness of this instrument or any such amendment. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference only
and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 7.6 Trust Not a Partnership. It is hereby expressly declared
that the Trust is a Massachusetts business trust and not a partnership, joint
venture, corporation, joint stock company or any form of legal relationship
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other than a trust is created hereby. Nothing herein shall be construed to make
the Shareholders, either by themselves or with the Trustees, partners or members
of a joint stock association. No Trustee hereunder shall have any power to bind
personally either a representative of the Trust or any officer or Shareholder.
All persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the Trust for payment
under such credit, contract or claim; and neither the Shareholders, the officers
nor the Trustees, whether past, present or future, shall be personally liable
therefor.
Section 7.7 Applicable Law. This Declaration of Trust is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth,
including the Massachusetts Business Corporation Law as the same may be amended
from time to time, to which reference is made with the intention that matters
not specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organized in corporate form. The Trust shall be of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 7.8 Name of Trust. The Trust acknowledges that it has obtained
its corporate name by consent of The Glenmede Corporation, having an office at
229 South 18th Street, Philadelphia, Pennsylvania, which consent was given in
reliance and upon the provisions contained in this Section 7.8. The Trust agrees
that if The Glenmede Trust Company should cease to be the investment adviser of
the Trust, the Trust will, upon written demand of The Glenmede Trust Company
forthwith (a) for a period of two years after such written demand, state in all
prospectuses, advertising material, letterheads and other material designed to
be read by investors or prospective investors, in a prominent position and in
prominent type (as may be reasonably approved by The Glenmede Trust Company),
that The Glenmede Trust Company no longer serves as the investment adviser of
the Trust, and (b) delete from its name the word "Glenmede" or any approximation
thereof. The Trust further agrees that The Glenmede Trust Company may permit
other persons, partnerships (general or limited), associations, trusts,
corporations or other incorporated or unincorporated groups of persons,
including without limitation any investment company or companies of any type
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<PAGE>
which may be initially sponsored or organized by The Glenmede Trust Company in
the future, to use the word "Glenmede" or any approximation thereof as part of
their names. As used herein, "The Glenmede Trust Company" shall include any
successor corporation, partnership, limited partnership, trust or person.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts for themselves and their assigns, as
of the day and year above written.
/s/Peter Meenan
--------------------------------
Peter Meenan, as Trustee and not
individually
/s/Patricia L. Bickimer
--------------------------------
Patricia L. Bickimer, as Trustee
and not individually
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<PAGE>
BY-LAWS
OF
THE GLENMEDE PORTFOLIOS
(March 3, 1992)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
to the Master Trust Agreement, as from time to time in effect (the "Master Trust
Agreement"), of The Glenmede Portfolios, the Massachusetts business trust
established by the Master Trust Agreement (the "Trust").
1.2 Principal Office of the Trust. The principal office of
the Trust shall be located in Wilmington, Delaware.
ARTICLE 2
Meetings of Trustees
2.1 Chairman. The Trustees may appoint one member of the Board of
Trustees to serve as Chairman thereof. The Chairman of the Trustees may but need
not be a Shareholder. Unless the Trustees otherwise provide, the Chairman of the
Trustees, or, if there is none, or in the absence of the Chairman, such person
as the Trustees shall designate shall preside at all meetings of the Trustees.
2.2 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.3 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer of the Trustees calling the meeting.
2.4 Notice. It shall be sufficient notice to a Trustee of
a special meeting to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to the Trustee
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<PAGE>
at his or her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
2.5 Quorum. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.6 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including Vice
Presidents, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time in
their discretion may appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall
be elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any office may be filled
at any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office until their respective successors are chosen and qualified, or in each
case until he or she sooner dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall retain authority at
the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
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<PAGE>
Master Trust Agreement set forth, such duties and powers as are commonly
incident to the office occupied by him or her as if the Trust were organized as
a Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 President. Unless the Trustees otherwise provide, the President
shall preside at all meetings of the shareholders. The President shall be the
chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Master Trust Agreement and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent or other service provider, be in charge of the valuable papers,
books of account and accounting records of the Trust, and shall have such other
duties and powers as may be designated from time to time by the Trustees or by
the President.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Administrator, the
Trust or at the office of the Trust's counsel. In the absence of the Secretary
from any meeting of the shareholders or Trustees, an assistant secretary, or if
there be none or if he or she is absent, a temporary secretary chosen at such
meeting shall record the proceedings thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman,
the President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Master Trust Agreement, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
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<PAGE>
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Master Trust Agreement or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Execution of Papers
6.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
ARTICLE 7
Issuance of Share Certificates
7.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
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<PAGE>
from time to time by the Trustees. Such certificate shall be signed by the
President or a Vice-President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a transfer agent,
or by a registrar, other than a Trustee, officer or employee of the Trust. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were such
officer at the time of its issue.
7.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
7.3 Issuance of New Certificate to Pledgee. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder, and entitled to vote
thereon.
7.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 8
Dealings with Trustees and Officers
Any Trustee, officer or other agent of the Trust may acquire, own and
dispose of shares of the Trust to the same extent as if he were not a trustee,
officer or agent; and the Trustees may accept subscriptions to shares or
repurchase shares from any firm or company in which he is interested.
ARTICLE 9
Amendments to the By-Laws
9.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
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<PAGE>
ARTICLE 10
Declaration of Trust
The Master Trust Agreement establishing The Glenmede Portfolios dated
March 3, 1992, a copy of which, together with all amendments thereto, is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name The Glenmede Portfolios refers to the Trustees under the Master
Trust Agreement collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of The Glenmede
Portfolios shall be held to any personal liability, nor shall resort be had to
their private property, for the satisfaction of any obligation or claim or
otherwise, in connection with the affairs of The Glenmede Portfolios, but the
Trust Estate only shall be liable.
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<PAGE>
Exhibit (5)(a)
INVESTMENT ADVISORY AGREEMENT
Agreement made this 5th day of June, 1992 by and between The Glenmede
Portfolios, a Massachusetts business trust (the "Company") and The Glenmede
Trust Company, a Pennsylvania corporation (the "Adviser").
1. Duties of Adviser. The Company hereby appoints the Adviser to act as
investment adviser to the Company's Muni Intermediate Portfolio (the
"Portfolio") and such other investment portfolios as may be offered by the
Company, for the period and on such terms set forth in this Agreement. The
Company employs the Adviser to manage the investment and reinvestment of the
assets of the Company's Portfolio, to continuously review, supervise and
administer the investment program of the Portfolio, to determine in its
discretion the securities to be purchased or sold and the portion of the
Portfolio's assets to be held uninvested, to provide the Company with records
concerning the Adviser's activities which the Company is required to maintain,
and to render regular reports to the Company's officers and Board of Trustees
concerning the Adviser's discharge of the foregoing responsibilities. The
Adviser shall discharge the foregoing responsibilities subject to the control of
the officers and the Board of Trustees of the Company and in compliance with the
objectives, policies and limitations set forth in the Company's prospectus and
applicable laws and regulations. The Adviser accepts such employment and agrees
<PAGE>
to render the services and to provide, at its own expense, the office space,
furnishings and equipment and the personnel required by it to perform the
services on the terms and for the compensation provided herein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers that will execute the purchases and sales of securities for the
Portfolio and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Subject to
policies established by the Board of Trustees of the Company, the Adviser may
also be authorized to effect individual securities transactions at commission
rates in excess of the minimum commission rates available, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Company and other
accounts as to which the Adviser exercises investment discretion. The execution
of such transactions shall not be deemed to represent an unlawful act or breach
of any duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Trustees of the Company such information
relating to portfolio transactions as they may reasonably request.
3. Compensation of the Adviser. The Company will pay no investment
advisory fees to the Adviser for services rendered by the Adviser under this
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<PAGE>
Agreement. However, it is understood that each shareholder of the Company will
be required to have a pre-existing relationship with the Adviser under which the
Adviser provides investment advisory, personal trust, estate, custodian or other
services to such shareholder on an individual basis. The shareholder will pay a
fee directly to the Adviser based on the services provided by the Adviser and
the total assets of the shareholder managed by the Adviser, including the
portion of such assets invested in the Company.
4. Other Services. At the request of the Company, the Adviser in its
discretion may make available to the Company office facilities, equipment, and
other services. Such office facilities, equipment, and services shall be
provided for or rendered by the Adviser and billed to the Company at the
Adviser's cost. The Adviser further agrees to assume the cost of printing and
mailing prospectuses to persons other than current shareholders of the Company
and the cost of any other activities primarily intended to result in the sale of
the Company's shares.
5. Reports. The Company and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
6. Status of Adviser. The services of the Adviser to the Company are
not to be deemed exclusive, and the Adviser shall be free to render similar
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<PAGE>
services to others so long as its services to the Company are not impaired
thereby.
7. Liability of Adviser. In the absence of (i) wilful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act"), the Adviser shall not be subject to any liability whatsoever to the
Company or to any shareholder of the Company, for any error or judgment, mistake
of law or any other act or omission in the course of, or connected with,
rendering services hereunder including without limitation, for any losses that
may be sustained in connection with the purchase, holding redemption or sale of
any security on behalf of the Portfolio.
8. Permissible Interests. Subject to and, in accordance with the Master
Trust Agreement of the Company and the Articles of Incorporation of the Adviser,
Trustees, officers, agents and shareholders of the Company are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Company as Trustees, officers,
shareholders or otherwise; and the Adviser (or any successor) is or may be
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<PAGE>
interested in the Company as a shareholder or otherwise; and that the effect of
any such interrelationships shall be governed by said Master Trust Agreement and
the provisions of the 1940 Act.
9. Corporate Name. The Company acknowledges that it has obtained its
corporate name by consent of the Adviser, which consent was given in reliance
and upon the provisions hereafter contained. The Company agrees that if the
Adviser should cease to be the investment adviser of the Company, the Company
will, upon written demand of the Adviser forthwith (a) for a period of two years
after such written demand, state in all prospectuses, advertising material,
letterheads and other material designed to be read by investors or prospective
investors, in a prominent position and in prominent type (as may be reasonably
approved by the Adviser), that The Glenmede Trust Company no longer serves as
the investment adviser of the Company, and (b) delete from its name the word
"Glenmede" or any approximation thereof. The Company further agrees that the
Adviser may permit other persons, partnerships (general or limited),
associations, trusts, corporations or other incorporated or unincorporated
groups of persons, including without limitation any investment company or
companies of any type which may be initially sponsored or organized by the
Adviser in the future, to use the word "GLENMEDE" or any approximation thereof
as part of, their names. As used in this section, "The Glenmede Trust Company"
and "Adviser" shall include any successor corporation, partnership, limited
partnership, trust or person.
-5-
<PAGE>
10. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue until the earlier of June 5, 1994 or the date
of the first annual or special meeting of the shareholders of the Company and,
if approved by a majority of the outstanding voting securities of the Portfolio,
thereafter shall continue as to the Portfolio for periods of one year so long as
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Company who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Trustees of the Company or by vote of a majority of the
outstanding voting securities of the Portfolio; provided however, that if the
holders of the Portfolio fail to approve the Agreement as provided herein, the
Adviser may continue to serve the Portfolio in such capacity in the manner and
to the extent permitted by the Company's Board of Trustees and the 1940 Act and
Rules thereunder. This Agreement may be terminated by the Portfolio of the
Company at any time, without the payment of any penalty, by vote of a majority
of the entire Board of Trustees of the Company or by vote of a majority of the
outstanding voting securities of the Portfolio on 60 days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time, without
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<PAGE>
the payment of any penalty, upon 90 days' written notice to the Company. This
agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing, addressed
and delivered or mailed postpaid, to the other party at any office of such
party.
As used in this Section 10, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the 1940 Act.
11. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any of such records upon the Company's
request. The Adviser further agrees to preserve for the periods prescribed by
Rule 3la-2 under the 1940 Act the records which it maintains for the Company and
are required to be maintained by Rule 3la-1 under the 1940 Act.
12. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
13. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Company must be approved by (a) by vote of a
majority of those members of the Board of Trustees of the Company who are not
parties to this Agreement or interested persons of any such party, cast in
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<PAGE>
person at a meeting called for the purpose of voting on such amendment, and
(b) by vote of a majority of the outstanding voting securities of the Portfolio.
14. Severability. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
15. Limitation of Liability. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company,
personally, but bind only the trust property of the Company, as provided in the
Master Trust Agreement of the Company dated March 3, 1992. The execution and
delivery of this Agreement have been authorized by the Trustees of the Company
and signed by the President of the Company, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Company as provided in the Master Trust Agreement.
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<PAGE>
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Agreement to be executed as of this 5th day of June,
1992.
ATTEST: THE GLENMEDE PORTFOLIOS
By: /s/Patricia L. Bickimer By: /s/John W. Church, Jr.
----------------------------- ----------------------------
Secretary President
THE GLENMEDE TRUST COMPANY
By: /s/Mary V. Burke By: /s/Mary Ann B. Wirts
----------------------------- ----------------------------
Secretary Vice President
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<PAGE>
Exhibit (5)(b)
SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
March 2, 1993
The Glenmede Trust Company
229 South 18th Street
Philadelphia, Pennsylvania 19103
This letter is to confirm that the undersigned, The Glenmede
Portfolios, a Massachusetts business trust (the "Company"), and The Glenmede
Trust Company, a Pennsylvania trust company (the "Advisor") have agreed that the
Advisory Agreement between the Company and the Advisor dated June 5, 1992 (the
"Agreement"), is herewith amended to provide that the Advisor shall be the
advisor for the New Jersey Muni and Maryland Muni Portfolios on the terms and
conditions contained in the Agreement.
If the foregoing is in accordance with your understanding,
kindly indicate your acceptance of this Supplement by signing and returning the
enclosed copy of this Supplement.
Very truly yours,
THE GLENMEDE PORTFOLIOS
By: /s/John W. Church, Jr.
------------------------
John W. Church, Jr.
President
Accepted and Agreed to:
THE GLENMEDE TRUST COMPANY
By: /s/Mary Ann B. Wirts
----------------------------
Authorized Signature
<PAGE>
Exhibit (5)(c)
AMENDMENT NO. 1
TO THE INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement dated June 5, 1992 between
THE GLENMEDE PORTFOLIOS, a Massachusetts business corporation (the "Company"),
and The Glenmede Trust Company, a Pennsylvania corporation (the "Advisor") is
hereby amended as follows:
The first sentence of Section 10, Duration and Termination, is
amended by the addition of the phrase "ending October 31 of each year" following
the words "for periods of one year".
The execution and delivery of this Amendment have been
authorized by the Company's Board of Trustees and signed by an authorized
officer of the Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Company as provided in
its Master Trust Agreement filed with the Commonwealth of Massachusetts on March
3, 1992.
IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties hereto have caused this amendment to be executed as of this 13th day of
September 1994.
ATTEST: THE GLENMEDE PORTFOLIOS
By: /s/Mary Ann B. Wirts By: /s/John W. Church, Jr.
------------------------ --------------------------
Title: Exec. Vice President Title: Chairman of the Board
THE GLENMEDE TRUST COMPANY
By: /s/Mary V. Burke By: /s/Al E. Piscopo
------------------------ --------------------------
Title: Corporate Secretary Title: Executive Vice President
<PAGE>
Exhibit (6)
THE GLENMEDE PORTFOLIOS
DISTRIBUTION AGREEMENT
This Agreement made as of July 1, 1995, by and between THE
GLENMEDE PORTFOLIOS, a Massachusetts Business Trust (the "Fund"), and ARMATA
FINANCIAL CORP., a Maryland corporation ("AFC").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund wishes to appoint AFC as its exclusive
distributor and AFC wishes to become the distributor; and
NOW, THEREFORE, in consideration of the premises, and of other
good and valuable consideration by each of the agreements, covenants and
obligations herein contained, the parties hereto agree as follows:
1. Appointment. The Fund appoints AFC as the exclusive
distributor of the Fund for the period and on the terms set forth in this
Agreement. AFC accepts such appointment and agrees to render the services herein
set forth for no compensation.
2. Delivery of Documents. The Fund has furnished AFC with
copies, properly certified or authenticated, of each of the following:
(a) The Fund's Master Trust Agreement and all
amendments thereto;
(b) The Fund's By-Laws and all amendments thereto
(such By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Fund's Board of Trustees
authorizing the appointment of AFC as the Fund's Distributor and approving this
Agreement;
(d) The Fund's notification of Registration filed
pursuant to Section 8(a) of the 1940 Act on Form N-8A under the 1940 Act, as
filed with the Securities and Exchange Commission (the "SEC");
(e) The Fund's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended (the "1933 Act") and under the 1940
Act as filed with the SEC and all amendments thereto; and
(f) The Fund's most recent prospectus (such
prospectus and all amendments and supplements thereto are herein called
"Prospectus").
The Fund will furnish AFC from time to time with copies,
properly certified or authenticated, of all amendments or supplements to the
foregoing, if any, and all documents, notices and reports filed with the SEC.
3. Duties as Distributor. AFC agrees that all solicitations
for subscriptions for Shares of the Fund shall be made in accordance with the
Fund's Declaration of Trust and By-Laws, and its then current Registration
Statement, Prospectus and Statement of Additional Information, and shall not at
any time or in any manner violate any provisions of the laws of the United
States or of any State or other jurisdiction in which solicitations are then
<PAGE>
being made. In carrying out its obligations hereunder, AFC shall undertake the
following actions and responsibilities:
(a) receive orders for purchase of Fund Shares,
accept or reject such orders on behalf of the Fund in accordance with the
currently effective Prospectus and Statement of Additional Information and
transmit such orders as are so accepted to the Fund's transfer agent as promptly
as possible;
(b) receive requests for redemption from holders of
Fund Shares and transmit such redemption requests to the Fund's transfer agent
as promptly as possible;
(c) respond to inquiries from the Fund's shareholders
concerning the status of their accounts with the Fund; and
(d) take, on behalf of the Fund, all actions which
appear to the Fund necessary to carry into effect the distribution of the Shares
and perform such other administrative duties with respect to the Fund Shares as
the Fund's Board of Trustees may require.
4. Distribution of Shares. AFC shall be the exclusive
distributor of the Fund Shares. It is mutually understood and agreed that AFC
does not undertake to sell all or any specific portion of the Fund Shares. The
Fund shall not sell any of the Fund Shares except through AFC and securities
dealers who have valid Agency Distribution Agreements with AFC. Notwithstanding
the provisions of the foregoing sentence, the Fund may issue its shares at their
net asset value to any shareholder of the Fund purchasing such Shares with
dividends or other cash distributions received from the Fund pursuant to an
offer made to all shareholders.
5. Control by Board of Trustees. Any distribution activities
undertaken by AFC pursuant to this Agreement, as well as any other activities
undertaken by AFC on behalf of the Fund pursuant hereto, shall at all times be
subject to any directives of the Board of Trustees of the Fund. The Board of
Trustees may agree, on behalf of the Fund, to amendments to this Agreement.
6. Compliance with Applicable Requirements. In
carrying out its obligations under this Agreement, AFC shall at all times
conform to:
(a) all applicable provisions of the 1940 Act and any
rules and regulations adopted thereunder as amended;
(b) the provisions of the Registration Statement of
the Fund under the 1933 Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the
Fund;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD") and all other self-regulatory
organizations applicable to the sale of investment company shares; and
(f) any other applicable provisions of state and
federal law.
7. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and AFC as follows:
(a) AFC shall furnish, at its expense and without
cost to the Fund, the services of personnel to the extent that such services are
required to carry out their obligations under this Agreement;
<PAGE>
(b) AFC shall, at its own expense and without cost to
the Fund, finance appropriate activities which it deems reasonable that are
primarily intended to result in the sale of the shares, including, but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of prospectuses to other than current
shareholders, and the printing and mailing of sales literature; and
(c) the Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including, without limitation: the fees of
the Fund's investment advisor; the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the safekeeping of its cash,
portfolio securities and other property, and any stock transfer, dividend or
accounting agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and corporate fees payable by the Fund to federal, state or other
governmental agencies; the cost and expense of engraving or printing of stock
certificates representing Shares; all costs and expenses in connection with
maintenance of registration of the Fund and its Shares with the SEC and various
states and other jurisdictions (including filing fees and legal fees and
disbursements of Fund counsel); the expenses of printing, including typesetting,
and distributing prospectuses of the Fund and supplements thereto to the Fund's
then current shareholders; all expenses of shareholders' and trustees' meetings
(except expenses relating to the materials sent by ICC and its affiliates to the
Board) and of preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of trustees or members of any advisory
board or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in Shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's Shares;
charges and expenses of the Fund's legal counsel, including counsel to the
directors of the Fund who are not "interested persons" of the Fund (as defined
in Section 2(a)(19) of the 1940 Act), and of independent accountants, in
connection with any matter relating to the Fund (except expenses relating to tax
returns); a portion of membership dues of industry associations; interest
payable on Fund borrowings; postage; insurance premiums on property or personnel
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and costs
of the Fund's operations unless otherwise explicitly provided herein.
8. Delegation of Responsibilities. AFC may, but shall be under
no duty to, perform services on behalf of the Fund which are not required by
this Agreement upon the request of the Fund's Board of Trustees. Payment or
assumption by AFC of any Fund expense that AFC is not required to pay or assume
under this Agreement shall not relieve AFC of any of its obligations to the Fund
or obligate AFC to pay or assume any similar Fund expense on any subsequent
occasions.
9. Compensation. For the services performed by AFC for the
Fund, the Fund will pay to AFC no fee.
10. Agency Distribution Agreements. AFC may enter into agency
distribution agreements (the "Agency Distribution Agreements") with any
securities dealer who is registered under the Securities Exchange Act of 1934
and a member in good standing of the NASD, who may wish to act as a transmitting
broker in connection with the proposed offering. All Agency Distribution
Agreements shall be in substantially the form of the agreement attached hereto
as Exhibit "A."
11. Non-Exclusivity. The services of AFC to the Fund are not
to be deemed exclusive and AFC shall be free to render distribution or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or directors of AFC may
<PAGE>
serve as officers or trustees of the Fund, and that officers or trustees of the
Fund may serve as officers or directors of AFC to the extent permitted by law;
and that officers or directors of AFC are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
servicing as partners, officers or directors of any other person, or from
serving as partners, officers or directors of any other firm or corporation,
including other investment companies.
12. Confidentiality. AFC agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Fund all
records and other information or data relative to the Fund, its prior, present
or potential shareholders and/or customers of The Glenmede Trust Company, except
after approval in writing by the Fund, which approval shall not be unreasonably
withheld where AFC may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund. AFC further agrees
not to use such records, information or data for any purpose other than the
performance of its responsibilities and duties hereunder.
13. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in force and effect
until October 31, 1996 and from year to year thereafter, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by
the vote of a majority of the outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the
trustees who are not "interested persons" of the Fund (as defined in Section
2(a)(19) of the 1940 Act) and who do not have a financial interest in the
operation of this Agreement, by votes cast in person at a meeting specifically
called for such purpose.
14. Termination. This Agreement may be terminated at any time,
on sixty (60) days' written notice to the other party without the payment of any
penalty, (i) by vote of the Fund's Board of Trustees, (ii) by vote of a majority
of the trustees who are not "interested persons" of the Fund (as defined in
Section 2(a)(19) of the 1940 Act) and who do not have a financial interest in
the operation of this Agreement, (iii) by vote of a majority of the Fund's
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act)
or (iv) by AFC. The notice provided for herein may be waived by each party. This
Agreement shall automatically terminate in the event of its assignment as
defined in Section 2(a)(4) of the 1940 Act.
15. Liability. In the performance of its duties hereunder, AFC
shall be obligated to exercise care and diligence and to act in good faith and
to use its best efforts within reasonable limits in performing all services
provided for under this Agreement, but shall not be liable for any act or
omission which does not constitute willful misfeasance, bad faith or gross
negligence on the part of AFC or reckless disregard by AFC of its duties under
this Agreement.
16. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage-paid to the other parties at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other parties, the addresses of the Fund and AFC are
as follows:
<PAGE>
If to AFC:
Armata Financial Corp.
135 East Baltimore Street
Baltimore, Maryland 21202
If to the Fund:
The Glenmede Trust Co.
One Liberty Place
1650 Market Square
Suite 1200
Philadelphia, Pennsylvania 19103
Attention: The Fund's President
With a copy to:
Mr. Michael P. Malloy
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
17. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof if any, by the United States courts or in the absence of
any controlling decision of any such court, by rules, regulations or orders of
the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Otherwise the
provisions of this Agreement shall be interpreted in accordance with the laws of
Maryland.
18. Names. The names "The Glenmede Portfolios" and "Board of
Trustees of The Glenmede Portfolios" refer respectively to the Fund created and
the Trustees, as trustees but not individually or personally, acting from time
to time under a Master Trust Agreement dated March 3, 1992, which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of the Fund.
The obligations of "The Glenmede Portfolios" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders, or representatives of the Fund personally, but bind only
the Fund Property, and all persons dealing with any class of shares of the Fund
must look solely to the Fund Property belonging to such class for the
enforcement of any claims against the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers as of the day
and year first above written.
[SEAL] THE GLENMEDE PORTFOLIOS
Attest: By: /s/John W. Church, Jr.
----------------------- ----------------------------
[SEAL] ARMATA FINANCIAL CORP.
Attest: By: /s/Edward J. Veilleux
----------------------- ----------------------------
<PAGE>
Exhibit A
THE GLENMEDE PORTFOLIOS
One Liberty Place
1650 Market Square, Suite 1200
Philadelphia, PA 19103
SUB-DISTRIBUTION AGREEMENT
________________, 19___
Gentlemen:
Armata Financial Corp. ("AFC"), a Maryland corporation, serves
as distributor (the "Distributor") of The Glenmede Portfolios (the "Fund"). The
Fund is an open-end investment company registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"). The Fund offers its
shares ("Shares") to the public in accordance with the terms and conditions
contained in its Prospectus. The term "Prospectus" used herein refers to the
prospectus on file with the Securities and Exchange Commission which is part of
the Fund's registration statement under the Securities Act of 1933 (the
"Securities Act"). In connection with the foregoing you may serve as a
participating dealer (and, therefore, accept orders for the purchase or
redemption of Shares, respond to shareholder inquiries and perform other related
functions) on the following terms and conditions:
1. Participating Dealer. You are hereby designated a
Participating Dealer and as such are authorized (i) to accept orders for the
purchase of Shares and to transmit to the Fund such orders and the payment made
therefore, (ii) to accept orders for the redemption of Shares and to transmit to
the Fund such orders and all additional material, including any certificates for
Shares, as may be required to complete the redemption and (iii) to assist
shareholders with the foregoing and other matters relating to their investments
in the Fund, in each case subject to the terms and conditions set forth in the
Fund's Prospectus. You are to review each Share purchase or redemption order
submitted through you or with your assistance for completeness and accuracy. You
further agree to undertake from time to time certain shareholder servicing
activities for customers of yours who have purchased Shares and who use your
facilities to communicate with the Fund or to effect redemptions or additional
purchases of Shares.
2. Limitation of Authority. No person is authorized to make
any representations concerning the Fund or the Shares except those contained in
the Fund's Prospectus and in such printed information as the Distributor may
subsequently prepare. No person is authorized to distribute any sales material
relating to the Fund without the prior written approval of the Distributor.
3. Compensation. As compensation for such services, you will
look solely to the Distributor, and you acknowledge that the Fund shall have no
direct responsibility for any compensation.
4. Prospectus and Reports. You agree to comply with the
provisions contained in the Securities Act governing the distribution of
prospectuses to persons to whom you offer Shares. You further agree to deliver,
upon our request, copies of any amended Prospectus of the Fund to purchasers
whose Shares you are holding as record owner and to deliver to such persons
copies of the annual interim reports and proxy solicitation materials of the
Fund. We agree to furnish to you as many copies of the Fund's Prospectus, annual
<PAGE>
and interim reports and proxy solicitation materials as you may reasonably
request.
5. Qualifications to Act. You represent that you are a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"). Your expulsion or suspension from the NASD will automatically terminate
this Agreement on the effective date of such expulsion or suspension. You agree
that you will not offer Shares to persons in any jurisdiction in which you may
not lawfully make such offer due to the fact that you have not registered under,
or are not exempt from, the applicable registration or licensing requirements of
such jurisdiction. You agree that in performing the services under this
Agreement, you at all times will comply with the Rules of Fair Practice of the
NASD, including, without limitation, the provisions of Section 26 of such Rules.
You agree that you will not combine customer orders to reach breakpoints in
commissions for any purposes whatsoever unless authorized by the then current
Prospectus in respect of Shares of a particular class or by us in writing. You
also agree that you will place orders immediately upon their receipt and will
not withhold any order so as to profit therefrom. In determining the amount
payable to you hereunder, we reserve the right to exclude any sales which we
reasonably determine are not made in accordance with the terms of the Prospectus
and provisions of the Agreement.
6. Blue Sky. The Fund has registered an indefinite number of
Shares under the Securities Act. The Fund intends to register or qualify in
certain states where registration or qualification is required. We inform you as
to the states or other jurisdictions in which we believe the Shares have been
qualified for sale under, or are exempt from the requirements of, the respective
securities laws of such states. You agree that you will offer Shares to your
customers only in those states where such Shares have been registered,
qualified, or an exemption is available. We assume no responsibility or
obligation as to your right to sell Shares in any jurisdiction. We will file
with the Department of State in New York a State Notice and a Further State
Notice with respect to the Shares, if necessary.
7. Authority of Fund. The Fund shall have full authority to
take such action as it deems advisable in respect of all matters pertaining to
the offering of its Shares, including the right not to accept any order for the
purchase of Shares.
8. Record Keeping. You will (i) maintain all records required
by law to be kept by you relating to transactions in Shares and, upon request by
the Fund, promptly makes such of these records available to the Fund as the Fund
may reasonably request in connection with its operations and (ii) promptly
notify the Fund if you experience any difficulty in maintaining the records
described in the foregoing clauses in an accurate and complete manner.
9. Liability. The Distributor shall be under no liability to
you except for lack of good faith and for obligations expressly assumed by them
hereunder, and the Fund shall have no liability to you in connection with the
matters to which this Agreement relates. In carrying out your obligations, you
agree to act in good faith and without negligence. Nothing contained in this
Agreement is intended to operate as a waiver by the Distributor or you of
compliance with any provision of the Investment Company Act, the Securities Act,
the Securities and Exchange Act of 1934, as amended, or the rules and
regulations promulgated by the Securities and Exchange Commission thereunder.
10. Termination. This Agreement may be terminated by either
party, without penalty, upon ten days' notice to the other party and shall
automatically terminate in the event of its assignment (as defined in the
Investment Company Act). This Agreement may also be terminated at any time
without penalty by the vote of a majority of the members of the Board of
Directors of the Fund who are not "interested persons" (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
<PAGE>
the operation of the Distribution Agreement between the Fund and the Distributor
or by the vote of a majority of the outstanding voting securities of the Fund.
11. Communications. All communications to us should be sent to
135 East Baltimore Street, Baltimore, Maryland 21202. Any notice to you shall be
duly given if mailed or telegraphed to you at the address specified by you
below.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us one copy of this agreement.
ARMATA FINANCIAL CORP.
___________________________
(Authorized Signature)
Confirmed and Accepted:
Firm Name: ____________________________
By: ____________________________
Address: ____________________________
Date: ____________________________
<PAGE>
Exhibit (8)(a)
CUSTODY AGREEMENT
AGREEMENT effective as of May 1, 1995 between THE CHASE MANHATTAN BANK,
N.A. ("Bank") and "THE GLENMEDE PORTFOLIOS, a Massachusetts business trust (the
"Fund").
WITNESSETH:
WHEREAS, the Fund wishes to retain Bank to provide custodian services
to the Fund for the benefit of the investment portfolios of the Fund listed on
Exhibit A hereto, as the same may be amended from time to time by the parties
hereto (each a "Portfolio," collectively, "Portfolios") and Bank is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Custody Account. The Bank agrees to establish and maintain (a) a
separate custody account for each Portfolio of the Fund ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money and any certificates, receipts, warrants or
other instruments representing rights to receive, purchase or subscribe for the
same or evidencing or representing any other rights of interests therein and
other similar property (hereinafter called "Securities") from time to time
received by the Bank or any subcustodian (as defined in the second paragraph of
Section 3 hereof) for the account of the particular Portfolio of the Fund
<PAGE>
and (b) a separate deposit account(s) in the name of each Portfolio of the Fund
("Deposit Account") for any and all cash and cash equivalents in any currency
received by the Bank or any subcustodian for the account of the particular
Portfolio of the Fund, which cash shall not be subject to withdrawal by draft or
check. The term "Property" as used herein shall mean all Securities, cash, cash
equivalents and other assets of the Fund.
2. Maintenance of Property Domestically and Abroad. Securities in a
Custody Account shall be held in the country or other jurisdiction as shall be
specified from time to time in Instructions (as defined in Section 9 hereof),
provided that such country or other jurisdiction shall be one in which the
principal trading market for such Securities is located or the country of other
jurisdiction in which such Securities are to be presented for payment or are
acquired for the Custody Account, and cash in a Deposit Account shall be
credited to an account in such country or other jurisdiction in which such cash
may be legally deposited or is the legal currency for the payment of public or
private debts. Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Fund with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Fund may direct, if acceptable to the Bank.
-2-
<PAGE>
3. Eligible Foreign Custodians and Securities Depositories. The Board
of Trustees of the Fund authorizes the Bank to hold the Securities in the
Custody Account(s) and the cash in the Deposit Account(s) in custody and deposit
accounts, respectively, which have been established by the Bank with one of its
branches, a branch of a qualified U.S. bank, an eligible foreign custodian or an
eligible foreign securities depository; provided, however, that the Board of
Trustees of the Fund has approved the use of, and the Bank's contract with, such
eligible foreign custodian or eligible foreign securities depository by
resolution, and Instructions to such effect have been provided to the Bank.
Furthermore, if a Bank's branch, a branch of a qualified U S. bank or an
eligible foreign custodian is selected to act as the Bank's subcustodian to hold
any Property, such entity is authorized to hold such Property in its account
with any eligible foreign securities depository in which it participates so long
as such foreign securities depository has been approved by the Board of Trustees
of the Fund. For purposes of this Agreement "qualified U.S. bank" and "eligible
foreign custodian," shall have the same meanings as are given in Rule 17f-5
under the Investment Company Act of 1940, as amended ("Rule 17f-5") and
"eligible foreign securities depository" shall be a depository within the
meaning of Rule 17f-5(c)(2)(iii) and (iv).
-3-
<PAGE>
Hereinafter the term "subcustodian" will refer to any Bank branch, any
branch of a qualified U.S. bank, any eligible foreign custodian or any eligible
foreign securities depository with which the Bank has entered into an agreement
of the type contemplated hereunder regarding Securities and/or cash held in or
to be acquired for a Custody Account or a Deposit Account.
If, after the initial approval of the subcustodians by the Board of
Trustees of the Fund in connection with this Agreement, the Bank wishes to
appoint other subcustodians to hold the Fund's Property, it will so notify the
Fund and will provide it with information reasonably necessary to determine any
such new subcustodian's eligibility under Rule 17f-5, including a copy of the
proposed agreement with such subcustodian. The Fund shall within 30 days after
receipt of such notice give a written approval or disapproval of the proposed
action.
If the Bank intends to remove any subcustodian previously approved, it
shall so notify the Fund and shall move the Property deposited with such
subcustodian to another subcustodian previously approved or to a new
subcustodian, provided that the appointment of any new subcustodian will be
subject to the requirements set forth in the preceding paragraph. The Bank shall
take steps as may be required to remove any subcustodian which has ceased to
meet the requirements of Rule 17f-5.
4. Use of Subcustodians. With respect to Property which is maintained
by the Bank in the physical custody of a subcustodian pursuant to Section 3 of
this Agreement:
-4-
<PAGE>
(a) The Bank will identify on its books as belonging to the
particular Portfolio of the Fund any Property held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities
placed in its care to be held in an eligible foreign securities depository, such
subcustodian will be required by its agreement with the Bank to identify on its
books such Securities as being held for the account of the Bank as a custodian
for its customers.
(c) Any Securities in a Custody Account held by a subcustodian of
the Bank will be subject only to the instructions of the Bank or its agents; and
any Securities held in a securities depository for the account of a subcustodian
will be subject only to the instructions of such subcustodian.
(d) The Bank will only deposit Securities in an account with a
subcustodian which includes exclusively the assets held by the Bank for its
customers, and the Bank will cause such account to be designated by such
subcustodian as a special custody account for the exclusive benefit of customers
of the Bank.
(e) Any agreement the Bank shall enter into with a subcustodian
with respect to the holding of Securities shall require that (i) the Securities
are not subject to any right, charge, security interest, lien or claim of any
kind in favor of such subcustodian or its creditors except for a claim of
payment for its safe custody or administration and (ii) beneficial ownership of
-5-
<PAGE>
such Securities is freely transferable without the payment of money or value
other than for safe custody or administration; provided, however, that the
foregoing shall not apply to the extent that any of the above-mentioned rights,
charges, etc. result from any compensation or other expenses arising with
respect to the safekeeping of Securities pursuant to such agreement.
(f) The Bank shall allow independent public accountants of the
Fund such reasonable access to the records of the Bank relating to Property held
in a Custody Account and a Deposit Account as required by such accountants in
connection with their examination of the books and records pertaining to the
affairs of the Fund. The Bank shall, subject to restrictions under applicable
law, also obtain from any subcustodian with which the Fund maintains the
physical possession of any Property an undertaking to permit independent public
accountants of the Fund such reasonable access to the records of such
subcustodian as may be required in connection with their examination of the
books and records pertaining to the affairs of the Fund or to supply a
verifiable confirmation of the contents of such records. The Bank shall furnish
the Fund such reports (or portions thereof) of the Bank's external auditors as
relate directly to the Bank's system of internal accounting controls applicable
to the Bank's duties under this Agreement. The Bank shall request for and
furnish to the Fund such similar reports as may be furnished to it with respect
to each subcustodian and securities depository holding the Fund's assets.
-6-
<PAGE>
(g) The Bank will supply to the Fund, care of its investment
adviser, at least monthly a statement in respect to any Property in a Custody
and a Deposit Account held by each subcustodian, including an identification of
the entity having possession of such Property, and the Bank will send to the
Fund an advice or notification of any transfers of Property to or from the
Custody Account and Deposit Account, indicating, as to Property acquired for an
investment portfolio of the Fund, the identity of the entity having physical
possession of such Property. In the absence of the filing in writing with the
Bank by the Fund of exceptions or objections to any such statement within sixty
(60) days of the Fund's receipt of such statement, or within sixty (60) days
after the date that a material defect is reasonably discoverable, the Fund shall
be deemed to have approved such statement and in such case or upon written
approval of the Fund of any such statement the Bank shall, to the extent
permitted by law and provided the Bank has met the standard of care in Section
12 hereunder, be released, relieved and discharged with respect to all matters
and things set forth in such statement as though such statement has been settled
by the decree of a court of competent jurisdiction in an action in which the
Fund and all persons having any equity interest in the Fund were parties.
-7-
<PAGE>
(h) The Bank hereby warrants to the Fund that in its opinion,
after due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign custodian,
each subcustodian and each eligible foreign securities depository holding
Securities of the Fund pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established procedures
with respect to similar Securities held by the Bank (and its securities
depositories) in New York.
(i) The Bank hereby warrants to the Fund that as of the date of
this Agreement it is maintaining a Bankers Blanket Bond sufficient to cover any
of its liabilities hereunder and hereby agrees to notify the Fund in the event
its Bankers Blanket Bond is canceled or otherwise lapses.
5. Deposit Account Payments. Subject to the provisions of Section 7,
the Bank shall make, or cause its subcustodian to make, payments of cash
credited to a Deposit Account only:
(a) in connection with the purchase of Securities for the
particular Portfolio of the Fund involved and the delivery of such Securities
to, or the crediting of such Securities to the particular Custody Account of the
Bank or its subcustodian, each such payment to be made at prices as confirmed by
Instructions from Authorized Persons (as defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the capital stock
of the particular Portfolio of the Fund involved and the delivery to, or
crediting to the account of, the Bank or its subcustodian of such shares to be
so purchased or redeemed;
-8-
<PAGE>
(c) for the payment for the account of the particular Portfolio of
the Fund involved of dividends, interest, taxes, management or supervisory fees,
capital distributions or operating expenses;
(d) for the payments to be made in connection with the conversion,
exchange or surrender of Securities held in a Custody Account;
(e) for spot or forward foreign exchange transactions to
facilitate security trading, receipt of income from Securities or related
transactions;
(f) for other proper corporate purposes of the particular
Portfolio of the Fund involved; or
(g) upon the termination of this Custody Agreement as hereinafter
set forth.
All payments of cash for a purpose permitted by subsection (a), (b),
(c) or (d) of this Section 5 will be made only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the purpose for which
the payment is to be made and the applicable subsection of this Section 5. In
the case of any payment to be made for the purpose permitted by subsection (f)
of this Section 5, the Bank must first receive a certified copy of a resolution
of the Board of Trustees of the Fund adequately describing such payment,
declaring such purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment shall be made. Any payment pursuant to
subsection (g) of this Section 5 will be made in accordance with Section 17
hereof.
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<PAGE>
In the event that any payment for a Portfolio of the Fund made under
this Section 5 exceeds the funds available in that Portfolio's Deposit Account,
the Bank may, in its discretion, advance the Fund on behalf of that Portfolio an
amount equal to such excess and such advance shall be deemed a loan from the
Bank to that Portfolio payable on demand, bearing interest at the rate of
interest customarily charged by the Bank on similar loans. If the Bank causes a
Deposit Account to be credited on the payable date for interest, dividends or
redemptions, the particular Portfolio of the Fund involved will promptly return
to the Bank any such amount or property so credited upon oral or written
notification that neither the Bank nor its subcustodian can collect such amount
or property in the ordinary course of business. The Bank or its subcustodian, as
the case may be, shall have no duty or obligation to institute legal
proceedings, file a claim or proof of claim in any insolvency proceeding or take
any other action with respect to the collection of such amount or property
beyond its ordinary collection procedures.
6. Custody Account Transactions. Subject to the provisions of Section
7, Securities in a Custody Account will be transferred, exchanged or delivered
by the Bank or its subcustodians only:
(a) upon sale of such Securities for the particular Portfolio of
the Fund involved and receipt by the Bank or its subcustodian of payment
therefor, each such payment to be in the amount confirmed by Instructions from
Authorized Persons;
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<PAGE>
(b) when such Securities are called, redeemed or retired, or
otherwise become payable;
(c) in exchange for or upon conversion into other Securities alone
or other Securities and cash pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their terms
into other Securities;
(e) upon exercise of subscription, purchase or other similar
rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(g) for the purpose of redeeming in-kind shares of the capital
stock of the particular Portfolio of the Fund involved against delivery to the
Bank or its subcustodian of such shares to be redeemed;
(h) in connection with any borrowings by the particular Portfolio
requiring a pledge of Securities, but only against receipt of amounts borrowed;
(i) in connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall reflect any
restrictions applicable to the Fund;
(j) for delivery in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer registered under the
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Securities Exchange Act of 1934 (the "Exchange Act") and a member of the
National Association of Securities Dealers, Inc. relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organizations, regarding escrow or other
arrangements in connection with transactions by the particular Portfolio;
(k) for release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be released only
upon payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive the Securities previously deposited from
brokers. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return.
(l) for other proper corporate purposes of the particular
Portfolio of the Fund involved; or
(m) upon the termination of this Custody Agreement as hereinafter
set forth.
All transfers, exchanges or deliveries of Securities in a Custody
Account for a purpose permitted by either subsection (a), (b), (c), (d), (e) or
(f) of this Section 6 will be made, except as provided in Section 8 hereof, only
upon receipt by the Bank of Instructions from Authorized Persons which shall
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specify the purpose of the transfer, exchange or delivery to be made and the
applicable subsection of this Section 6. In the case of any transfer or delivery
to be made for the purpose permitted by subsection (g) of this Section 6, the
Bank must first receive Instructions from Authorized Persons specifying the
shares held by the Bank or its subcustodian to be so transferred or delivered
and naming the person or persons to whom transfers or delivery of such shares
shall be made. In the case of any transfer, exchange or delivery to be made for
the purpose permitted by subsection (h) of this Section 6, the Bank must first
receive a certified copy of a resolution of the Board of Trustees of the Fund
adequately describing such transfer, exchange or delivery, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made. Any transfer or delivery
pursuant to subsection (m) of this Section 6 will be made in accordance with
Section 17 hereof.
7. Custody Account Procedures. With respect to any transaction
involving Securities held in or to be acquired for a Custody Account, the Bank
in its discretion may cause the Deposit Account for the particular Portfolio of
the Fund involved to be credited on the contractual settlement date with the
proceeds of any sale or exchange of Securities from the particular Custody
Account and to be debited on the contractual settlement date for the cost of
Securities purchased or acquired for the particular Custody Account. The Bank
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<PAGE>
may reverse any such credit or debit if the transaction with respect to which
such credit or debit was made fails to settle within a reasonable period,
determined by the Bank in its discretion, after the contractual settlement date,
except that if any Securities delivered pursuant to this Section 7 are returned
by the recipient thereof, the Bank may cause any such credits and debits to be
reversed at any time. With respect to any transactions as to which the Bank does
not determine so to credit or debit the particular Deposit Account, the proceeds
from the sale or exchange of Securities will be credited and the cost of such
Securities purchased or acquired will be debited to the particular Deposit
Account on the date such proceeds or Securities are received by the Bank.
Notwithstanding the preceding paragraph, settlement and payment for
Securities received for, and delivery of Securities out of, a Custody Account
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the expectation of
receiving later payment for such Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives Instructions from
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian, to:
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(a) present for payment any Securities in a Custody Account which
are called, redeemed or retired or otherwise become payable and all coupons and
other income items which call for payment upon presentation to the extent that
the Bank or subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance with the
provisions of Sections 2, 3 and 4 hereof;
(b) in respect of Securities in a Custody Account, execute in the
name of the Fund on behalf of the particular Portfolio involved such ownership
and other certificates as may be required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in a Custody
Account for definitive Securities;
(d) (if applicable) convert monies received with respect to
Securities of foreign issue into United States dollars or any other currency
necessary to effect any transaction involving the Securities whenever it is
practicable to do so through customary banking channels, using any method or
agency available, including, but not limited to, the facilities of the Bank, its
subsidiaries, affiliates or subcustodians;
(e) (if applicable) appoint brokers and agents for any transaction
involving the Securities in a Custody Account, including, without limitation,
affiliates of the Bank or any subcustodian; and
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(f) reclaim taxes withheld by foreign issuers where reclaim is
possible, provided that Bank has been provided with all documentation it may
require.
9. Instructions. As used in this Agreement, the term "Instructions"
means instructions of the Fund received by the Bank via telephone, telex, TWX,
facsimile transmission, bank wire or other teleprocess or electronic instruction
system acceptable to the Bank which the Bank believes in good faith to have been
given by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the particular Portfolio
of the Fund involved will hold the Bank harmless for the Fund's (i) failure to
send such confirmation in writing, or (ii) the failure of such confirmation to
conform to the telephone Instructions received. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect until
canceled or superseded. If the Bank requires test arrangements, authentication
methods or other security devices to be used with respect to Instructions, any
Instructions given by the Fund thereafter shall be given and processed in
accordance with such terms and conditions for the use of such arrangements,
methods or devices as the Bank may put into effect and modify from time to time.
The Fund shall safeguard any testkeys, identification codes or other security
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devices which the Bank shall make available to them. The Bank may electronically
record any Instructions given by telephone, and any other telephone discussions,
with respect to a Custody Account.
10. Authorized Persons. As used in this Agreement, the term "Authorized
Persons" means such officers or such agents of the Fund as have been designated
by a resolution of the Board of Trustees of the Fund, a certified copy of which
has been provided to the Bank, to act on behalf of the Fund in the performance
of any acts which Authorized Persons may do under this Agreement. Such persons
shall continue to be Authorized Persons until such time as the Bank receives
Instructions from Authorized Persons that any such officer or agent is no longer
an Authorized Person.
11. Nominees. Securities in a Custody Account which are ordinarily held
in registered form may be registered in the name of the Bank's nominee or, as to
any Securities in the possession of an entity other than the Bank, in the name
of such entity's nominee. The particular Portfolio of the Fund involved agrees
to hold any such nominee harmless from any liability as a holder of record of
such Securities, but not if such liability is a result of such nominee's
negligence. The Bank may without notice to the Fund cause any such Securities to
cease to be registered in the name of any such nominee and to be registered in
the name of the Fund. In the event that any Securities registered in the name of
the Bank's nominee or held by one of its subcustodians and registered in the
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name of such subcustodian's nominee are called for partial redemption by the
issuer of such Security, the Bank may allot, or cause to be allotted, the
called portion to the respective beneficial holders of such class of security
in any manner the Bank deems to be fair and equitable.
12. Standard of Care.
(a) The Bank shall be obligated to perform only such duties as are
set forth in this Agreement or expressly contained in instructions given to Bank
which are consistent with the provisions of this Agreement.
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
Property. The Bank shall be liable to the Fund for any loss
which shall occur as the result of the failure of a
subcustodian or an eligible foreign securities depository to
exercise reasonable care with respect to the safekeeping of
such Property to the same extent that the Bank would be liable
to the Fund if the Bank were holding such Property in New
York. In the event of any loss to the Fund by reason of the
failure of the Bank or its subcustodian or an eligible foreign
securities depository to exercise reasonable care, the Bank
shall be liable to the Fund only to the extent the Fund's
direct damages and expenses, to be determined based on, but
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<PAGE>
not limited to, the market value of the Property which is the
subject of the loss at the date of discovery of such loss, and
without reference to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent (other than
as provided herein) which it or a subcustodian appoints and
uses unless such appointment and use were made or done
negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability
to the Fund and the particular Portfolio of the Fund involved
for any action taken or omitted by the Bank whether pursuant
to Instructions or otherwise within the scope of this
Agreement if such act or omission was in good faith and
without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any
document which it believes in good faith and without
negligence to have been validly executed.
(iv) The Fund, on behalf of the particular Portfolio of the
Fund involved, agrees to cause such Portfolio to pay for and
hold the Bank harmless from any liability or loss resulting
from the imposition or assessment of any taxes or other
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<PAGE>
governmental charges, and any related expenses with respect to
income from or Property in such Portfolio's Custody Account
and Deposit Account.
(v) The Bank shall be entitled to rely, and may act upon the
advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability for any action
reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
(vi) The Bank need not maintain any insurance for the
exclusive benefit of the Fund.
(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from:
1) the general risk of investing, or
2) subject to Section 12(a)(i) hereof, investing or
holding Property in a particular country including, but not
limited to, losses resulting from nationalization,
expropriation or other governmental actions; regulation of the
banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which
prevent the orderly execution of securities transactions or
affect the value of Property.
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<PAGE>
(viii) No party shall be liable to the other for any loss due
to forces beyond its control including but not limited to
strikes or work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of
this Section 12, it is specifically acknowledged that the Bank shall have no
duty or responsibility to:
(i) Question Instructions or make any suggestions to the Fund
or an Authorized Person regarding such Instructions;
(ii) Supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) Subject to Section 12(a)(ii) hereof, evaluate or report
to the Fund or an Authorized Person regarding the financial
condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this
Agreement; or
(iv) Review or reconcile trade confirmations received from
brokers.
(c) The Bank shall provide to the Fund, on an annual basis, a
report confirming that the arrangements hereunder remain in compliance with the
rules of the Securities and Exchange Commission governing such arrangements.
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13. Compliance with Securities and Exchange Commission Rules and
Orders. Except to the extent the Bank has specifically agreed pursuant to this
Agreement or in an exemptive order to comply with a condition of Rule 17f-5 or
any interpretation or exemptive order promulgated thereunder by or under the
authority of the Securities and Exchange Commission, the Fund shall be solely
responsible to assure that the maintenance of Securities and cash under this
Agreement complies with such Rule 17f-5.
14. Corporate Actions.
(a) With respect to domestic U.S. and Canadian Securities (the
latter only when held with DTC), the Bank will send to the Customer or the
Authorized Person for a Custody Account such proxies (signed in blank, if issued
in the name of the Bank's nominee or the nominee of a central depository) and
communications with respect to Securities in the Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by the Bank for forwarding to its customers. In addition,
the Bank will follow coupon payments, redemptions, exchanges or similar matters
with respect to Securities in the Custody Account and advise the Customer or the
Authorized Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of which the
Bank has received notice from the issuer of the Securities, or as to which
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notice is published in publications routinely utilized by the
Bank for this purpose.
(b) With respect to proxies and Corporate Actions (as defined
below) not covered by paragraph (a) of this Section 14:
(i) Whenever the Bank or its subcustodian receives information
concerning the Securities which requires discretionary action
by the beneficial owner of the Securities (other than a
proxy), such as subscription rights, bonus issues, stock
repurchase plans and rights offerings, or legal notices or
other material intended to be transmitted to securities
holders ("Corporate Actions"), the Bank will give the Fund
notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a
Corporate Action in time to notify its customers.
(ii) When a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend, stock split or
similar Corporate Action is received which bears an expiration
date, the Bank or its subcustodians will endeavor to obtain
Instructions from the Fund or its Authorized Persons, but if
Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was
received too late to seek Instructions, the Bank is
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<PAGE>
authorized to sell such rights entitlement or fractional
interest and to credit the applicable Deposit Account with the
proceeds and to take any other action it deems in good faith
to be appropriate in which case, provided it has met the
standard of care in Section 12 hereof, it shall be held
harmless by the particular Portfolio of the Fund involved for
any such action.
(iii) Proxies will only be voted pursuant to special
arrangements which may have been agreed to in writing between
the parties hereto.
15. Fees and Expenses. The Fund agrees to pay the Bank from time to
time such compensation for its services pursuant to this Agreement as may be
mutually agreed upon in writing from time to time and the Bank's out-of-pocket
or incidental expenses, including (but without limitation) reasonable legal
fees. The Fund hereby agrees on behalf of its respective Portfolios to cause the
particular Portfolio of the Fund involved to hold the Bank harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed, or assessed with respect to
such Portfolio's Custody Account and also agrees on behalf of its respective
Portfolios to cause the particular Portfolio of the Fund involved to hold the
Bank, its subcustodians, and their respective nominees harmless from any
liability as a record holder of Securities in such Portfolio's Custody Account.
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The Bank is authorized to charge any account of the particular Portfolio of the
Fund involved for such items specified in the previous sentence and the Bank
shall have a lien on Securities in such Portfolio's Custody Account and on cash
in such Portfolio's Deposit Account for any amount owing to the Bank in
connection with such Portfolio from time to time under this Agreement.
16. Effectiveness. This Agreement shall be effective on the date first
noted above.
17. Termination. This Agreement may be terminated by the Fund or the
Bank by 60 days' written notice to the other, sent by registered mail. If notice
of termination is given by the Bank, the Fund shall, within 60 days following
the giving of such notice, deliver to the Bank a certified copy of a resolution
of the Board of Trustees of the Fund specifying the names of the persons to whom
the Bank shall deliver such Securities and cash, after deducting therefrom any
amounts which the Bank determines to be owed to it under Section 15 hereof. If
within 60 days following the giving of a notice of termination by the Bank, the
Bank does not receive from the Fund a certified copy of a resolution of the
Board of Trustees of the Fund specifying the names of the persons to whom the
cash in each Deposit Account shall be paid and to whom the Securities in each
Custody Account shall be delivered, the Bank, at its election, may deliver such
Securities and pay such cash to a bank or trust company doing business in the
State of New York and qualified as a custodian under the Investment Company Act
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of 1940 and other applicable rules and regulations to be held and disposed of
pursuant to the provisions of this Agreement, or to Authorized Persons, or may
continue to hold such Securities and cash until a certified copy of one or more
resolutions as aforesaid is delivered to the Bank. The obligations of the
parties hereto regarding the use of reasonable care, indemnities and payment of
fees and expenses shall survive the termination of this Agreement, and the
obligations of each Portfolio of the Fund to indemnify and/or hold harmless
other persons or entities under this Agreement shall be the several (and not the
joint or joint and several) obligation of each Portfolio of the Fund.
18. Notices. Any notice or other communication from the Fund to the
Bank is to be sent to the office of the Bank at:
The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or such other address as may hereafter be given to the Fund in accordance with
the notice provisions hereunder, and any notice from the Bank to the Fund is to
be mailed postage prepaid, addressed to the Fund at the addresses appearing
below, or as the same may hereafter be changed on the Bank's records in
accordance with notice hereunder from the Fund.
19. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by any
party without prior written consent of the other party, and shall bind the
successors and assigns of the Fund and the Bank.
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20. Names. The names "The Glenmede Portfolios" and "Board of Trustees
of The Glenmede Portfolios" refer respectively to the Fund created and the
Trustees, as trustees but not individually or personally, acting from time to
time under a Master Trust Agreement dated March 3, 1992, which is hereby
referred to and a copy of which is on file at the office of the state Secretary
of the Commonwealth of Massachusetts and at the principal office of the Fund.
The obligations of "The Glenmede Portfolios" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders, or representatives of the Fund personally, but bind only
the Fund Property, and all persons dealing with any class of shares of the Fund
must look solely to the Fund Property belonging to such class for the
enforcement of any claims against the Fund.
21. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
22. Counterpart Execution. This Agreement may be executed in any number
of counterparts with the same effect as if all parties hereto had signed the
same document. All counterparts shall be construed together and shall constitute
one agreement.
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23. Confidentiality. Bank agrees on behalf of itself and its employees
to treat confidentially all records and other information relative to the Fund
and its prior, present, or potential shareholders, except, after prior
notification to and approval in writing by the Fund which approval shall not be
unreasonably withheld and may not be withheld where Bank may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Matthew D. Goad
------------------------------------
Address for record:
4 MetroTech Center
------------------------------------
Brooklyn, New York
------------------------------------
THE GLENMEDE PORTFOLIOS
By: /s/John W. Church, Jr.
-----------------------------------
Address for record:
One Liberty Place
------------------------------------
1650 Market Street, Suite 1200
------------------------------------
Philadelphia, PA 19103-7391
------------------------------------
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EXHIBIT A
Portfolios covered by the Custodian Agreement between The Chase Manhattan Bank,
N.A. and The Glenmede Portfolios.
Muni Intermediate Portfolio
New Jersey Muni Portfolio
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<PAGE>
Amendment to Custody Agreement
Amendment dated May 1, 1995, to the Custody Agreement dated May 1,
1995, between The Glenmede Portfolios ("Fund") and The Chase Manhattan Bank,
N.A. ("Bank").
It is agreed that from the date hereof, until such time as Bank
acquires United States Trust Company of New York ("US Trust"):
1. The following shall be inserted at the end of ss.1: "Bank may
appoint any bank qualifying under ss.17f(1) of the Investment Company Act of
1940, as amended, as its subcustodian with respect to Fund's U.S. and Canadian
Securities (the latter only where held with The Depository Trust Company
("DTC")) and such bank shall be a 'subcustodian' for purposes of this Agreement.
In that connection, Fund hereby approves the appointment by Bank of United
States Trust Company of New York ("US Trust") as such subcustodian."
2. The following shall be inserted in the third line of ss.12(a)(iii)
after the word "Bank": "or US Trust."
This Amendment may be executed in any number of counterparts with the
same effect as if all parties hereto had signed the same document. All
counterparts shall be construed together and shall constitute one Amendment.
IN WITNESS WHEREOF, intending to be legally bound, the parties have
executed this Amendment as of the above-written date.
THE GLENMEDE PORTFOLIOS THE CHASE MANHATTAN BANK, N.A.
By: /s/ John W. Church, Jr. By: /s/Matthew Goad
----------------------------- ----------------------------
Title: President Title: Vice President
------------------------- -------------------------
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Exhibit (9)(a)
MASTER SERVICES AGREEMENT
THIS AGREEMENT is made as of the 1st day of July, 1995 by and
between THE GLENMEDE PORTFOLIOS, a Massachusetts Business Trust (the "Fund"),
and INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation ("ICC").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain ICC to provide certain
services on behalf of the Fund, as set forth in the Appendices to this
Agreement, and ICC is willing so to serve.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints ICC to perform such
services and to serve such functions on behalf of the Fund as set forth in the
Appendices to this Agreement, on the terms set forth in this Agreement and the
Appendices hereto. ICC accepts such appointment and agrees to furnish such
services and serve such functions. The Fund may have currently outstanding one
or more series or classes of its shares of common stock ("Shares") and may from
time to time hereafter issue separate series or classes of its Shares or
classify and reclassify Shares of any series or class, and the appointment
effected hereby shall constitute appointment for the provision of services with
respect to all existing series and classes and any additional series and classes
unless the Fund shall notify ICC to the contrary.
2. Delivery of Documents. The Fund has furnished ICC with
copies properly certified or authenticated of the following documents and will
furnish ICC from time to time with copies, properly certified or authenticated,
of all amendments of or supplements thereto, if any:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of ICC to act in such capacities on behalf of the
Fund as set forth in the Appendices to this Agreement, and the entering into of
this Agreement by the Fund;
(b) The Fund's Master Trust Agreement and all
amendments thereto (the "Charter") and the Fund's By-Laws and all amendments
thereto (the "By-Laws");
(c) The Fund's most recent Registration Statement on
Form N-1A under the Securities Act of 1933, as amended (the "1933 Act") and
under the 1940 Act as filed with the Securities and Exchange Commission (the
"SEC") relating to the Shares; and
(d) Copies of the Fund's most recent prospectus or
prospectuses, including amendments and supplements thereto (collectively, the
"Prospectus").
3. Services to be Provided; Fees. During the term of this
Agreement, ICC shall perform the services and act in such capacities on behalf
of the Fund as set forth herein and in the Appendices to this Agreement. For the
services performed by ICC for the Fund, the Fund will compensate ICC in such
<PAGE>
amounts as set forth in the Fee Schedule attached hereto, as the same may be
amended from time to time by the parties in writing.
4. Records. The books and records pertaining to the Fund which
are in the possession of ICC shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Fund, or the Fund's
authorized representatives, shall have access to such books and records at all
times during ICC's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by ICC to the Fund
or the Fund's authorized representative at the Fund's expense.
5. Cooperation With Accountants. In addition to any
obligations set forth in an Appendix hereto, ICC shall cooperate with the Fund's
independent accountants and shall take all reasonable actions in the performance
of its obligations under this Agreement to ensure that the necessary information
is made available to such accountants for the expression of such accountants'
opinion of the Fund's financial statements or otherwise, as such may be required
by the Fund from time to time.
6. Compliance With Governmental Rules and Regulations. Except
with respect to the responsibilities for monitoring and reporting on compliance
and other services to be performed by ICC hereunder, the Fund assumes full
responsibility for ensuring that the Fund complies with all applicable
requirements of the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act"), the 1940 Act, and any laws, rules and regulations of governmental
authorities having jurisdiction. ICC undertakes to comply with all applicable
requirements of the 1933 Act, the 1934 Act, the 1940 Act, the Commodities
Exchange Act (if applicable), and all laws, rules and regulations of
governmental authorities having jurisdiction with respect to the performance by
ICC of its duties under this Agreement, including the Appendices hereto.
7. Expenses.
(a) ICC shall bear all expenses of its employees and
overhead, incurred in connection with its duties under this Agreement and shall
pay all salaries and fees of the Fund's trustees and officers who are employees
of ICC.
(b) The Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including, without limitation: the fees of
the Fund's investment advisor, administrator and distributor; the charges and
expenses of any registrar, any custodian or depositary appointed by the Fund for
the safekeeping of its cash, portfolio securities and other property, and any
stock transfer, dividend or accounting agent or agents appointed by the Fund;
brokers' commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes, including
securities issuance and transfer taxes, and corporate fees payable by the Fund
to federal, state or other governmental agencies; the cost and expense of
engraving or printing of stock certificates representing Shares; all costs and
expenses in connection with maintenance of registration of the Fund and its
Shares with the SEC and various states and other jurisdictions (including filing
fees and legal fees and disbursements of Fund counsel); the expenses of
printing, including typesetting, and distributing prospectuses of the Fund and
supplements thereto to the Fund's then current shareholders; all expenses of
shareholders' and trustees' meetings (except expenses relating to the materials
sent by ICC and its affiliates to the Board) and of preparing, printing and
mailing of proxy statements and reports to shareholders; fees and travel
expenses of trustees or members of any advisory board or committee; all expenses
incident to the payment of any dividend, distribution, withdrawal or redemption,
whether in Shares or in cash; charges and expenses of any outside service used
for pricing of the Shares; charges and expenses of the Fund's legal counsel,
including counsel to the trustees of the Fund who are not "interested persons"
of the Fund (as defined in the 1940 Act), and of independent accountants, in
connection with any matter relating to the Fund (except expenses relating to tax
returns); a portion of membership dues of industry associations; interest
payable on fund borrowings; postage; insurance premiums on property or
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<PAGE>
personnel (including officers and trustees) of the Fund which inure to its
benefit; extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operation unless otherwise explicitly
provided herein.
8. Liability: Indemnification. Neither ICC nor any of its
officers, trustees or employees shall be liable for any error of judgment or for
any loss suffered by the Fund in connection with the matters to which this
Agreement, including the Appendices hereto, relates, except a loss resulting
from willful misfeasance, bad faith or negligence on its or their part in the
performance of, or from reckless disregard by it or them of its or their
obligations and duties under this Agreement. Neither ICC nor any of its
officers, trustees or employees shall be liable to the Fund in the performance
of their obligations hereunder for any loss resulting from the willful
misfeasance, bad faith or negligence of others not controlled by them or under
their direction. ICC shall not be liable to the Fund and the Fund agrees to
indemnify and hold harmless ICC and its nominees from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the 1934 Act, the 1940 Act, and any
state and foreign securities and blue sky laws, all as currently in existence or
as amended from time to time) and expenses, including (without limitation)
attorneys' fees and disbursements, arising directly or indirectly from any
action or thing which ICC takes or does or omits to take or do at the request or
on the direction of or in reliance on the advice of the Fund; provided, that
neither ICC nor any of its nominees shall be relieved from any liability or
indemnified against any liability to the Fund or to its shareholders (or any
expenses incident to such liability) arising out of ICC's own willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations under this Agreement. Notwithstanding anything else in this
Agreement or any Appendix hereto to the contrary, ICC shall have no liability to
the Fund for any consequential, special or indirect losses or damages which the
Fund may incur or suffer as a consequence of ICC's performance of the services
provided in this Agreement or any Appendix hereto.
9. Responsibility of ICC. ICC shall be under no duty to take
any action on behalf of the Fund except as specifically set forth herein or as
may be specifically agreed to by ICC in writing. In the performance of its
duties hereunder, ICC shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits in
performing services provided for under this Agreement, but ICC shall not be
liable for any act or omission which does not constitute willful misfeasance,
bad faith or negligence on the part of ICC or reckless disregard by ICC of its
duties under this Agreement. Notwithstanding anything in this Agreement to the
contrary, ICC shall have no liability to the Fund for any consequential, special
or indirect losses or damages which the Fund may incur or suffer by or as a
consequence of ICC's performance of the services provided hereunder.
10. Non-Exclusivity. The services of ICC to the Fund are not
to be deemed exclusive and ICC shall be free to render accounting or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that trustees, officers or employees of
ICC may serve as trustees or officers of the Fund, and that trustees or officers
of the Fund may serve as trustees, officers and employees of ICC to the extent
permitted by law; and that trustees, officers and employees of ICC are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, trustees or officers
of any other firm or corporation, including other investment companies.
11. Notice. Any notice or other communication required to be
given pursuant to this Agreement shall be deemed duly given if delivered or
mailed by registered mail, postage prepaid, to the Fund at The Glenmede Trust
Company, One Liberty Place, 1650 Market Square, Suite 1200, Philadelphia,
Pennsylvania 19103, Attention: the Fund's President, with a copy to Mr. Michael
P. Malloy, at Drinker Biddle & Reath, Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107-3496 or to ICC at 135 E.
Baltimore Street, Baltimore, Maryland 21202, Attention: Mr. Edward J. Veilleux.
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<PAGE>
12. Names. The names "The Glenmede Portfolios" and "Board of
Trustees of The Glenmede Portfolios" refer respectively to the Fund created and
the Trustees, as trustees but not individually or personally, acting from time
to time under a Master Trust Agreement dated March 3, 1992, which is hereby
referred to and a copy of which is on file at the office of the state Secretary
of the Commonwealth of Massachusetts and at the principal office of the Fund.
The obligations of "The Glenmede Portfolios" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders, or representatives of the Fund personally, but bind only
the Fund Property, and all persons dealing with any class of shares of the Fund
must look solely to the Fund Property belonging to such class for the
enforcement of any claims against the Fund.
13. Miscellaneous.
(a) This Agreement shall become effective as of the
date first above written and shall remain in force until terminated. This
Agreement, or any Appendix hereto, may be terminated at any time without the
payment of any penalty, by either party hereto on sixty (60) days' written
notice to the other party.
(b) This Agreement shall be construed in accordance
with the laws of the State of Maryland.
(c) If any provisions of this Agreement shall be held
or made invalid in whole or in part, the other provisions of this Agreement
shall remain in force. Invalid provisions shall, in accordance with the intent
and purpose of this Agreement, be replaced by mutual consent of the parties with
such valid provisions which in their economic effect come as close as legally
possible to such invalid provisions.
(d) Except as otherwise specified in the Appendices
hereto, ICC shall be entitled to rely on any notice or communication reasonably
believed by it to be genuine and correct and to have been sent to it by or on
behalf of the Fund.
(e) ICC agrees on behalf of itself and its employees
(i) to treat confidentially all records and other information or data relative
to the Fund, its prior, present, or potential record and beneficial shareholders
and/or customers of The Glenmede Trust Company and (ii) not to use such records,
information or data for any purpose other than performance of its
responsibilities and duties under this Agreement or any Agreement or any
Appendix attached hereto, except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably withheld and may
not be withheld where ICC may be exposed to civil or criminal contempt
proceeding for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund.
(f) Any part of this Agreement or any Appendix
attached hereto may be changed or waived only by an instrument in writing signed
by both parties hereto.
(g) This Agreement and each Appendix attached hereto
shall extend to and shall be binding upon the parties hereto and their
respective successors and assigns; provided however, that this Agreement and
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<PAGE>
each Appendix attached hereto shall not be assignable without the written
consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
THE GLENMEDE PORTFOLIOS
By: /s/John W. Church, Jr.
------------------------------
Title:
INVESTMENT COMPANY CAPITAL CORP.
By: /s/Edward Veilleux
------------------------------
Title:
Appendices:
Administrative Services
Accounting Services
Transfer Agency Services
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<PAGE>
Date: July 1, 1995
FEE SCHEDULE FOR SERVICES PROVIDED TO
THE GLENMEDE FUND, INC. AND
THE GLENMEDE PORTFOLIOS
PURSUANT TO THE MASTER SERVICES AGREEMENT
AND THE APPENDICES THERETO
Investment Company Capital Corp.
- Administrative Services
- Accounting Services
- Transfer Agency Services
For the combined services listed above, Investment Company
Capital Corp. will charge the following fees to the Glenmede Fund, Inc. and The
Glenmede Portfolios based upon their combined net assets.
Combined Net Assets Incremental Fee
------------------- ---------------
$0 - $100,000,000 .12%
over $100,000,000 - $250,000,000 .08%
over $250,000,000 - $750,000,000 .04%
over $750,000,000 .03%
<PAGE>
ADMINISTRATIVE SERVICES APPENDIX
to
MASTER SERVICES AGREEMENT
between
The Glenmede Portfolios and Investment Company Capital Corp.
This Appendix is hereby incorporated into and made a part of
the Master Services Agreement dated as of July 1, 1995 (the "Master Services
Agreement") between The Glenmede Portfolios and Investment Company Capital Corp.
Defined terms not otherwise defined herein shall have the meaning set forth in
the Master Services Agreement.
1. Services to be Provided. ICC will perform the following
services on an ongoing basis:
(a) supervise and manage all aspects of the Fund's
operations, other than portfolio management and distribution;
(b) provide the Fund with such executive,
administrative, clerical and bookkeeping services as are deemed advisable by the
Fund's Board of Trustees;
(c) provide the Fund with, or obtain, adequate office
space and all necessary equipment and services, including telephone service,
heat, utilities, stationery supplies and similar items for any offices as are
deemed advisable by the Fund's Board of Trustees;
(d) arrange but, except for the preparation of tax
returns, not pay for, the periodic updating of Prospectuses and supplements
thereto, proxy material, tax returns, reports to the Fund's shareholders and
reports to and filings with the SEC and state Blue Sky authorities.
(e) provide the Fund with such administrative and
clerical services for the maintenance of certain shareholder records as are
deemed advisable by the Fund's Board of Trustees; and
(f) monitor and report on the Fund's compliance with
all regulatory, tax and prospectus requirements.
2. Fees. For the service performed by ICC for the Fund
pursuant to this Appendix, the Fund will pay to ICC compensation for such
services as set forth in the Fee Schedule attached to the Master Services
Agreement, as the same may be amended from time to time by the parties in
writing.
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<PAGE>
ACCOUNTING SERVICES APPENDIX
to
MASTER SERVICES AGREEMENT
between
The Glenmede Portfolios and Investment Company Capital Corp.
This Appendix is hereby incorporated into and made a part of
the Master Services Agreement dated as of July 1, 1995 (the "Master Services
Agreement") between The Glenmede Portfolios and Investment Company Capital Corp.
Defined terms not otherwise defined herein shall have the meaning set forth in
the Master Services Agreement.
1. Accounting Services to be Provided. ICC will perform the
following accounting functions:
(a) Journalize investment, capital shares and income and
expense;
(b) Verify investment buy/sell trade tickets when
received from the Fund's investment advisor and
transmit trades to the Fund's custodian for proper
settlement;
(c) Maintain individual ledgers for investment
securities;
(d) Maintain tax lots for each security;
(e) Reconcile cash and investment balances with the
custodian, and provide the Fund's investment advisor
with the beginning cash balance available for
investment purposes;
(f) Update the cash availability through out the day as
required by the Fund's investment advisor;
(g) Post to and prepare the Fund's Statement of Net
Assets and Liabilities and the Statement of
Operations;
(h) Calculate various contractual expenses (e.g. advisor
and custody fees);
(i) Monitor and report on the expense accruals and notify
Fund management of any proposed adjustments;
(j) Control all disbursements from the Fund and authorize
such disbursements upon written instructions from the
President or any other officer of the Fund or the
investment advisor;
(k) Calculate capital gains and losses;
(l) Determine the Fund's net income;
(m) Obtain security market quotes from independent
pricing services approved by the investment advisor,
or if such quotes are unavailable, then obtain such
prices from the investment advisor, and in either
case calculate the market value of portfolio
investments;
(n) Transmit or mail a copy of the daily portfolio
valuation to the Fund's investment advisor;
<PAGE>
(o) Compute the Fund's net asset value in accordance with
the Fund's current Prospectus and resolutions of the
Fund's Board;
(p) As appropriate, compute the yields, total return,
expense ratios, and portfolio turnover rate;
(q) Prepare a monthly financial statement, which will
include the following items:
- Schedule of Investments;
- Statement of Net Assets and Liabilities;
- Statement of Operations;
- Statement of Changes in Net Assets;
- Cash Statement;
- Schedule of Capital Gains and Losses;
(r) Prepare and file with the appropriate regulatory
authorities (as applicable):
- Federal and State Tax Returns;
- Excise Tax Returns;
- Annual, Semi-annual and Quarterly Shareholder
Reports;
- Rules 24(e)-2 and 24(f)-2 Notices;
- Annual and Semi-Annual Reports on Form N-SAR;
(s) Assist in Federal registration, Blue Sky registration
and the Blue Sky and Federal registration compliance
processes;
(t) Assist in the review of registration statements;
(u) Monitor and report on compliance with Sub-Chapter M
of the Internal Revenue Code; and
(v) Prepare and furnish the Fund with performance
information (including yield and total return
information) calculated in accordance with applicable
U.S. securities laws and report to external databases
such information as may reasonably be requested.
2. Records. ICC shall keep the following records:
(a) All books and records with respect to the Fund's
books of account; and
(b) Records of the Fund's securities transactions.
3. Liaison With Accountants. In addition to ICC's obligations
relating to the Fund's independent accountants set forth in the Master Services
Agreement, ICC shall act as liaison with the Fund's independent accountants and
shall provide account analyses, fiscal year summaries, and other audit related
schedules.
4. Compensation. For services performed by ICC pursuant to
this Appendix, the Fund will pay to ICC compensation for such services as set
forth in the Fee Schedule attached to the Master Services Agreement, as the same
may be amended from time to time by the parties in writing.
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<PAGE>
TRANSFER AGENCY SERVICES APPENDIX
to
MASTER SERVICES AGREEMENT
between
The Glenmede Portfolios and Investment Company Capital Corp.
This Appendix is hereby incorporated into and made a part of
the Master Services Agreement dated as of July 1, 1995 (the "Master Services
Agreement") between The Glenmede Portfolios and Investment Company Capital Corp.
Defined terms not otherwise defined herein shall have the meaning set forth in
the Master Services Agreement.
1. Definitions.
(a) "Authorized Person". The term "Authorized Person"
shall mean any officer of the Fund and any other person, who is fully authorized
by the Fund's Board of Trustees, to give Oral and Written Instructions on behalf
of the Fund. Initial "Authorized Persons" are listed in the Certificate attached
hereto.
(b) Oral Instructions. The term "Oral Instructions"
shall mean oral instructions received by ICC from an Authorized Person or from a
person reasonably believed by ICC to be an Authorized Person.
(c) Written Instructions. The term "Written
Instructions" shall mean written instructions signed by two Authorized Persons
and received by ICC. The instructions may be delivered by hand, mail, tested
telegram, cable, telex or facsimile sending device.
2. Description of Services.
(a) General Services To Be Provided. ICC shall
provide to the Fund the following services on an ongoing basis, if applicable:
(i) Calculate 12b-1 payments;
(ii) Maintain proper shareholder
registrations;
(iii) Review new applications and
correspond with shareholders, if
necessary, to complete or correct
information;
(iv) Direct payment processing of checks
or wires;
(v) Prepare and certify stockholder lists
in conjunction with proxy
solicitations; solicit and tabulate
proxies; receive and tabulate proxy
cards for meetings of the Fund's
shareholders;
(vi) Countersign securities;
(vii) Direct shareholder confirmation of
activity;
(viii) Provide toll-free lines for direct
shareholder use, plus customer
liaison staff for on-line inquiry
response;
<PAGE>
(ix) Mail duplicate confirmation to
broker-dealers of their clients'
activity, whether executed through
the broker-dealer or directly with
ICC;
(x) Provide periodic shareholder lists
and statistics to the Fund;
(xi) Provide detail for underwriter/broker
confirmations;
(xii) Mail periodic year-end tax and
statement information;
(xiii) Provide timely notification to
investment advisor, accounting agent,
and custodian of Fund activity; and
(xiv) Perform other participating
broker-dealer shareholder services as
may be agreed upon from time to time.
(b) Purchase of Shares. ICC shall issue Shares and
credit an account of an investor, in the manner described in the Prospectus,
once it receives: (i) a purchase order; (ii) proper information to establish a
shareholder account; and (iii) confirmation of receipt by, or crediting of funds
for such order to, the Fund's custodian. ICC shall notify the Fund in case any
proposed issue of Shares in the Fund shall result in an over-issue as defined by
Section 8-104(2) in the UCC, and in case any issue would result in such an
over-issue, shall refuse to countersign and issue, and/or credit, such Shares.
(c) Redemption of Shares. ICC shall redeem the Fund's
Shares only in accordance with the provisions of the Prospectus and each
shareholder's individual directions. Shares shall be redeemed at such time as
the shareholder tenders his or her shares and directs the method of redemption
in accordance with the terms set forth in the Prospectus. If securities are
received in proper form, Shares shall be redeemed before the funds are provided
to ICC. When the Fund provides ICC with funds, redemption proceeds will be wired
(if requested) or a redemption check issued. All redemption checks shall be
drawn to the recordholder unless third party payment authorizations have been
signed by the recordholder and delivered to ICC.
(d) Dividends and Distributions. Upon receipt of
certified resolutions of the Fund's Board of Trustees authorizing the
declaration and payment of dividends and distributions, ICC shall issue the
dividends and distributions in Shares, or, upon shareholder election, pay such
dividends and distributions in cash. Such issuance or payment shall be made
after deduction and payment of the required amount of funds to be withheld in
accordance with any applicable tax laws or other laws, rules or regulations. The
Fund's shareholders shall receive tax forms and other information, or
permissible substitute notice, relating to dividends and distributions, paid by
the Fund as are required to be filed and mailed by applicable law, rule or
regulation. ICC shall maintain and file with the IRS and other appropriate
taxing authorities reports relating to all dividends and distributions paid by
the Fund to its shareholders as required by tax or other law, rule or
regulation.
(e) Shareholder Account Services. If authorized in
the Prospectus, ICC shall arrange for the following services, in accordance with
the applicable terms set forth in the Prospectus: (i) the issuance of Shares
obtained through any pre-authorized check plan and direct purchases through
broker wire orders, checks and applications; (ii) exchanges of shares of any
fund for Shares of the Fund with which the Fund has exchange privileges; (iii)
automatic redemption from an account where that shareholder participates in an
automatic redemption plan; and (iv) redemption of Shares from an account with a
check writing privilege.
(f) Communications to Shareholders. Upon timely
Written Instructions, ICC shall mail all communications by the Fund to its
shareholders, including, reports to shareholders, confirmation of purchases and
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<PAGE>
sales of Shares, monthly or quarterly statements, dividend and distribution
notices, and proxy material.
(g) Records. ICC shall maintain records of the
accounts for each shareholder showing the following information: (i) name,
address and U.S. Tax Identification or Social Security number; (ii) number and
class of Shares held and number and class of Shares for which certificates, if
any, have been issued, including dividends and distributions paid and the date
and price for all transactions on a shareholder's account; (iii) any stop or
restraining order placed against a shareholder's account; (iv) any
correspondence relating to the shareholder's account; (v) information with
respect to withholdings; (vi) any information required in order for ICC to
perform any calculations contemplated or required by this Appendix or the Master
Services Agreement; and (vii) ICC shall keep a record of all redemption and
dividend checks returned by postal authorities, and shall maintain such records
as are required for the Fund to comply with the escheat laws of any state or
other authority.
(h) Lost or Stolen Certificates. ICC shall place a
stop notice against any certificate reported to be lost or stolen and comply
with all applicable federal regulatory requirements for reporting such loss or
alleged misappropriation. A new certificate shall be registered and issued upon:
(1) the shareholder's pledge of a lost instrument bond or such other appropriate
indemnity bond issued by a surety company approved by ICC; and (ii) completion
of a release and indemnification agreement signed by the shareholder to protect
ICC.
(i) Shareholder Inspection of Stock Records. Upon
requests from Fund shareholders to inspect stock records, ICC will notify the
Fund and the Fund shall deliver Oral or Written Instructions granting or denying
each such request. Unless ICC has acted contrary to the Fund's Instructions, the
Fund agrees to release ICC from any liability for refusal or permission for a
particular shareholder to inspect the Fund's shareholder records.
(j) Withdrawal of Shares and Cancellation of
Certificates. Upon receipt of Written Instructions, ICC shall cancel outstanding
certificates surrendered by the Fund to reduce the total amount of outstanding
Shares by the number of Shares surrendered by the Fund.
(k) Telephone Transactions. In accordance with the
terms of the Prospectus, ICC shall act upon shareholder requests made by
telephone for redemption or exchange of Fund shares provided that (i) the
shareholder has authorized telephone transactions on the Fund's Account
Application or otherwise in writing, (ii) if the request is a redemption, the
amount to be redeemed does not exceed $50,000 and (iii) ICC has complied with
the identification and other security procedures required by the Fund in
connection with telephone transactions.
3. Fees. As compensation for the services performed by ICC for
the Fund pursuant to this Appendix, the Fund will pay to ICC such amounts as set
forth in the Fee Schedule attached to the Master Services Agreement, as the same
may be amended from time to time by the parties in writing.
4. Delegation of Responsibilities. ICC may subcontract to any
third party reasonably acceptable to the Fund, all or any part of its
obligations under this Appendix; provided that any such subcontracting shall not
relieve ICC of any of its obligations under this Appendix. All subcontractors
shall be paid by ICC.
5. Instructions. Unless otherwise provided in this Appendix,
ICC shall act only upon Oral and Written Instructions. ICC shall be entitled to
rely upon any Oral and Written Instructions it receives from an Authorized
Person (or from a person reasonably believed by ICC to be an Authorized Person)
pursuant to this Appendix. ICC may assume that any Oral or Written Instructions
received hereunder is not in any way inconsistent with the revisions of the
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<PAGE>
Fund's Declaration of Trust, or of any vote, resolutions or proceeding of the
Fund's Board of Trustees or shareholders.
The Fund agrees to forward to ICC Written Instructions
confirming Oral Instructions so that ICC receives the Written Instructions by
the close of business on the same day that such Oral Instructions are received.
The fact that such confirming Written Instructions are not received by ICC shall
in no way invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. The Fund further agrees that ICC shall
incur no liability to the Fund in acting upon Oral or Written Instructions
provided such instructions reasonably appear to have been received from an
Authorized Person.
If ICC is in doubt as to any action it should not take, ICC
may request directions or advice, including Oral or Written Instructions, from
the Fund. Provided ICC has met its standard of care specified in the Master
Services Agreement, ICC shall be protected in any action it takes or does not
take in reliance upon directions, advice or Oral or Written Instructions it
receives from the Fund or from Fund counsel and which ICC believes, in good
faith, to be consistent with those directions, advice or Oral or Written
Instructions. Notwithstanding the foregoing, ICC shall have no obligation (i) to
seek such directions, advice or Oral or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral or Written Instructions unless,
under the terms or other provisions of this Appendix, the same is a condition of
ICC's properly taking or not taking such action.
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<PAGE>
Exhibit (9)(b)
THE GLENMEDE PORTFOLIOS
AMENDED AND RESTATED
SHAREHOLDER SERVICING PLAN
Section 1. Each of the proper officers of The Glenmede Portfolios (the
"Company") is authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based substantially on the form attached hereto
as Appendix A or any other form duly-approved by the Company's Board of Trustees
("Agreements") with broker/dealers, banks and other financial institutions that
are dealers of record or holders of record or which have a servicing
relationship ("Servicing Agents") with the beneficial owners of shares in any of
the Company's series listed on Exhibit I hereto (the "Portfolios"). Pursuant to
such Agreements, Servicing Agents shall provide shareholder support services as
set forth therein to their clients who beneficially own shares of the Portfolios
in consideration of a fee, computed monthly in the manner set forth in the
applicable Portfolio's then current prospectus, at an annual rate of 0.05% of
the average daily net asset value of the shares beneficially owned by or
attributable to such clients. Affiliates of the Company's distributor,
administrator and adviser are eligible to become Servicing Agents and to receive
fees under this Plan. All expenses incurred by the Portfolios in connection with
the Agreements and the implementation of this Plan shall be borne entirely by
the holders of the shares of the particular Portfolio involved. If more than one
Portfolio is involved and expenses are not directly attributable to shares of a
particular Portfolio, then the expenses may be allocated between or among the
shares of the Portfolios in a manner determined by the Board.
Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Servicing Agents. The Company's
administrator shall not, however, be obligated by this Plan to recommend, and
the Company shall not be obligated to execute, any Agreement with any qualifying
Servicing Agents.
Section 3. So long as this Plan is in effect, the Company's
administrator shall provide to the Company's Board of Trustees, and the Trustees
shall review, at least quarterly, a written report of the amounts expended
pursuant to this Plan and the purposes for which such expenditures were made.
Section 4. This Plan shall continue in effect until October 31, 1996
and unless sooner terminated, this Plan shall continue in effect thereafter for
successive annual periods, provided that such continuance is specifically
approved by a majority of the Board of Trustees, including a majority of the
Trustees who are not "interested persons," as defined in the Investment Company
<PAGE>
Act of 1940, of the Company and have no direct or indirect financial interest in
the operation of this Plan or in any Agreement related to this Plan (the
"Disinterested Trustees") pursuant to a vote cast in person at a meeting called
for the purpose of voting on this Plan.
Section 5. This Plan may be amended at any time with respect to any
Portfolio by the Company's Board of Trustees, provided that any material
amendment of the terms of this Plan (including a material increase of the fee
payable hereunder) shall become effective only upon the approvals set forth in
Section 4.
Section 6. This Plan is terminable at any time with respect to any
Portfolio by vote of a majority of the Disinterested Trustees.
Section 7. While this Plan is in effect, the selection and nomination
of those Trustees who are not "interested persons (as defined in the Investment
Company Act of 1940) of the Company shall be committed to the discretion of such
non-interested Trustees.
Section 8. The Company will preserve copies of this Plan, Agreements,
and any written reports regarding this Plan presented to the Board of Trustees
for a period of not less than six years.
Dated: December 6, 1995
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<PAGE>
EXHIBIT I
THE GLENMEDE PORTFOLIOS
Portfolio Fee
- --------- ---
(as a percentage of
average daily net
assets)
Muni Intermediate Portfolio .05%
New Jersey Muni Portfolio .05%
Maryland Muni Portfolio .05%
<PAGE>
APPENDIX A
THE GLENMEDE PORTFOLIOS
AMENDED AND RESTATED
SHAREHOLDER SERVICING AGREEMENT
Ladies and Gentlemen:
We wish to enter into this Shareholder Servicing Agreement
("Agreement") with you concerning the provision of administrative support
services to your clients ("Customers") who may from time to time beneficially
own shares in one or more series listed on Exhibit I hereto (the "Portfolios")
of The Glenmede Portfolios (the "Company").
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide the following administrative support
services to your Customers who may from time to time beneficially own shares of
one or more Portfolios:1 (i) aggregating and processing purchase and redemption
requests from Customers and transmitting promptly net purchase and redemption
orders to our distributor or transfer agent; (ii) providing Customers with a
service that invests the assets of their accounts in shares pursuant to specific
or pre-authorized instructions; (iii) processing dividend and distribution
payments from the Company on behalf of Customers; (iv) providing information
periodically to Customers showing their positions; (v) arranging for bank wires;
(vi) responding to Customers' inquiries concerning their investment; (vii)
providing subaccounting with respect to shares beneficially owned by Customers
or the information necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to Customers; and (ix) providing such other similar services as
we may reasonably request to the extent you are permitted to do so under
applicable statutes, rules or regulations. All services rendered hereunder by
you shall be performed in a professional, competent and timely manner.
Section 2. You will perform only those activities which are consistent
with statutes and regulations applicable to you. You will act solely as agent
or, upon the order of, and for the account of, your Customers.
- ---------------
1 Services may be modified or omitted in the particular case and items
relettered or renumbered.
<PAGE>
Section 3. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the administrative
support services contemplated hereby.
Section 4. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the shares except
those contained in our then current prospectuses and statements of additional
information, as amended or supplemented from time to time, copies of which will
be supplied by us to you, or in such supplemental literature or advertising as
may be authorized by our distributor or us in writing.
Section 5. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for us in
any matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of shares (or orders relating to the same) by or on
behalf of Customers. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 6. In consideration of the services and facilities provided by
you hereunder, we will pay to you, and you will accept as full payment therefor,
a fee as described in Exhibit I hereto, as amended from time to time. The fee
rate payable to you may be prospectively increased or decreased by us, in our
sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of shares of any and
all Portfolios, including the sale of shares to you for the account of any
Customer or Customers. Compensation payable under this Agreement may be subject
to, among other things, the National Association of Securities Dealers, Inc.
("NASD") Rules of Fair Practice governing receipt by NASD members of shareholder
servicing plan fees from registered investment companies (the "NASD Servicing
Plan Rule"), which became effective on July 7, 1993. Such compensation shall
only be paid if permissible under the NASD Servicing Plan Rule and shall not be
payable for services that are deemed to be distribution-related services.
Section 7. You will furnish us or our designees with such information
as we or they may reasonably request (including, without limitation, periodic
-2-
<PAGE>
certifications confirming the provision to Customers of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors or legal counsel designated by us), in
connection with the preparation of reports to our Board of Trustees concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
Section 8. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 9. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares issued by
us; and (ii) the compensation payable to you hereunder, together with any other
compensation you receive in connection with the investment of your Customers'
assets in shares of the Portfolios, will be disclosed by you to your Customers
to the extent required by applicable laws or regulations, will be authorized by
your Customers and will not result in an excessive or unreasonable fee to you.
Section 10. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until October 31, (initial tern cannot
exceed one year and must end on October 31) and thereafter will continue
automatically for successive annual periods provided such continuance is
specifically approved at least annually by us in the manner described in
Section 11. This Agreement is terminable with respect to shares of any
Portfolio, without penalty, at any time by us (which termination may be by a
vote of a majority of our Disinterested Trustees as defined below) or by you
upon written notice to the other party hereto.
Section 11. This Agreement has been approved by vote of a majority of
(1) our Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in the operation of the Shareholder
Servicing Plan adopted by us regarding the provision of support services to the
beneficial owners of shares of the Portfolios or in any agreement related
thereto cast in person at a meeting called for the purpose of voting on such
approval ("Disinterested Trustees").
Section 12. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address or number stated herein
-3-
<PAGE>
(with a confirming copy by mail), or to such other address as either party shall
so provide in writing to the other.
Section 13. This Agreement will be construed in accordance with the
internal laws of The Commonwealth of Pennsylvania without giving effect to
principles of conflict of laws, and is nonassignable by the parties hereto.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, at the following address: Investment Company Capital Corp., 135 East
Baltimore Street, Baltimore, Maryland 21202; fax number (410) 637-6875;
Attention: Brian C. Nelson.
Very truly yours,
The Glenmede Portfolios
Date: By:
-------------------- --------------------------
Name:
------------------------
Title:
-----------------------
Accepted and Agreed to:
Servicing Agent
-----------------------------
(Firm Name)
-----------------------------
(Address)
-----------------------------
(City) (State)
Fax #:
-----------------------
Attention:
-------------------
Date: By:
-------------------- --------------------------
Name:
------------------------
Title:
-----------------------
-4-
<PAGE>
EXHIBIT I
THE GLENMEDE PORTFOLIOS
Portfolio Fee
(as a percentage of
average daily net
assets)
Muni Intermediate Portfolio .05%
New Jersey Muni Portfolio .05%
Maryland Muni Portfolio .05%
<PAGE>
Exhibit (9)(c)
THE GLENMEDE PORTFOLIOS
AMENDED AND RESTATED
SHAREHOLDER SERVICING AGREEMENT
Ladies and Gentlemen:
We wish to enter into this Shareholder Servicing Agreement
("Agreement") with you concerning the provision of administrative support
services to your clients ("Customers") who may from time to time beneficially
own shares in one or more series listed on Exhibit I hereto (the "Portfolios")
of The Glenmede Portfolios (the "Company").
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide the following administrative support
services to your Customers who may from time to time beneficially own shares of
one or more Portfolios:1 (i) aggregating and processing purchase and redemption
requests from Customers and transmitting promptly net purchase and redemption
orders to our distributor or transfer agent; (ii) providing Customers with a
service that invests the assets of their accounts in shares pursuant to specific
or pre-authorized instructions; (iii) processing dividend and distribution
payments from the Company on behalf of Customers; (iv) providing information
periodically to Customers showing their positions; (v) arranging for bank wires;
(vi) responding to Customers' inquiries concerning their investment; (vii)
providing subaccounting with respect to shares beneficially owned by Customers
or the information necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to Customers; and (ix) providing such other similar services as
we may reasonably request to the extent you are permitted to do so under
applicable statutes, rules or regulations. All services rendered hereunder by
you shall be performed in a professional, competent and timely manner.
Section 2. You will perform only those activities which are consistent
with statutes and regulations applicable to you. You will act solely as agent
or, upon the order of, and for the account of, your Customers.
- ---------------
1 Services may be modified or omitted in the particular
case and items relettered or renumbered.
<PAGE>
Section 3. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the administrative
support services contemplated hereby.
Section 4. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the shares except
those contained in our then current prospectuses and statements of additional
information, as amended or supplemented from time to time, copies of which will
be supplied by us to you, or in such supplemental literature or advertising as
may be authorized by our distributor or us in writing.
Section 5. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for us in
any matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of shares (or orders relating to the same) by or on
behalf of Customers. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 6. In consideration of the services and facilities provided by
you hereunder, we will pay to you, and you will accept as full payment therefor,
a fee as described in Exhibit I hereto, as amended from time to time. The fee
rate payable to you may be prospectively increased or decreased by us, in our
sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of shares of any and
all Portfolios, including the sale of shares to you for the account of any
Customer or Customers. Compensation payable under this Agreement may be subject
to, among other things, the National Association of Securities Dealers, Inc.
("NASD") Rules of Fair Practice governing receipt by NASD members of shareholder
servicing plan fees from registered investment companies (the "NASD Servicing
Plan Rule"), which became effective on July 7, 1993. Such compensation shall
only be paid if permissible under the NASD Servicing Plan Rule and shall not be
payable for services that are deemed to be distribution-related services.
Section 7. You will furnish us or our designees with such information
as we or they may reasonably request (including, without limitation, periodic
-2-
<PAGE>
certifications confirming the provision to Customers of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors or legal counsel designated by us), in
connection with the preparation of reports to our Board of Trustees concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
Section 8. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 9. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares issued by
us; and (ii) the compensation payable to you hereunder, together with any other
compensation you receive in connection with the investment of your Customers'
assets in shares of the Portfolios, will be disclosed by you to your Customers
to the extent required by applicable laws or regulations, will be authorized by
your Customers and will not result in an excessive or unreasonable fee to you.
Section 10. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until October 31, 1996 and thereafter
will continue automatically for successive annual periods provided such
continuance is specifically approved at least annually by us in the manner
described in Section 11. This Agreement is terminable with respect to shares of
any Portfolio, without penalty, at any time by us (which termination may be by a
vote of a majority of our Disinterested Trustees as defined below) or by you
upon written notice to the other party hereto.
Section 11. This Agreement has been approved by vote of a majority of
(1) our Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in the operation of the Shareholder
Servicing Plan adopted by us regarding the provision of support services to the
beneficial owners of shares of the Portfolios or in any agreement related
thereto cast in person at a meeting called for the purpose of voting on such
approval ("Disinterested Trustees").
Section 12. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address or number stated herein
-3-
<PAGE>
(with a confirming copy by mail), or to such other address as either party shall
so provide in writing to the other.
Section 13. This Agreement will be construed in accordance with the
internal laws of The Commonwealth of Pennsylvania without giving effect to
principles of conflict of laws, and is nonassignable by the parties hereto.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, at the following address: Investment Company Capital Corp., 135 East
Baltimore Street, Baltimore, Maryland 21202; fax number (410) 637-6875;
Attention: Brian C. Nelson.
Very truly yours,
The Glenmede Portfolios
Date: December 6, 1995 By: /s/ John W. Church, Jr.
Name: John W. Church, Jr.
Title: President
Accepted and Agreed to:
Servicing Agent
The Glenmede Trust Company
(Firm Name)
1650 Market Street, Suite 1200
(Address)
Philadelphia, PA 19103-7391
(City) (State)
Fax #: (215) 419-6197
Attention: John W. Church, Jr.
Date: December 6, 1995 By: /s/ John W. Church, Jr.
-------------------------------
Name: John W. Church, Jr.
----------------------------
Title: SVP
----------------------------
-4-
<PAGE>
EXHIBIT I
THE GLENMEDE PORTFOLIOS
Portfolio Fee
(as a percentage of
average daily net
assets)
Muni Intermediate Portfolio .05%
New Jersey Muni Portfolio .05%
Maryland Muni Portfolio .05%
<PAGE>
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the
reference to our Firm under the caption "Counsel" in the
Prospectus that is included in Post-Effective Amendment No. 6 to
the Registration Statement (No. 33-46593) on Form N-1A under the
Securities Act of 1933, as amended, and Post-Effective Amendment
No. 7 to the Registration Statement (No. 811-6578) on Form N-1A
under the Investment Company Act of 1940, as amended, of The
Glenmede Portfolios. This consent does not constitute a consent
under section 7 of the Securities Act of 1933, and in consenting
to the use of our name and the references to our Firm under such
caption we have not certified any part of the Registration
Statement and do not otherwise come within the categories of
persons whose consent is required under said section 7 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
/s/ Drinker Biddle & Reath
--------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
December 21, 1995
<PAGE>
PURCHASE AGREEMENT
The Glenmede Portfolios (the "Portfolios"), a Massachusetts business
trust, and The Glenmede Trust Company ("Glenmede Trust"), a Pennsylvania trust
company, hereby agree with each other as follows:
1. The Portfolios hereby offers Glenmede Trust and Glenmede Trust
hereby purchases one share each (the "Share") of the Portfolios'
New Jersey Muni Portfolio and Maryland Muni Portfolio for $10.00
per share. The Portfolios hereby acknowledges receipt from
Glenmede Trust of funds in the total amount of $10.00 in full
payment for each Share.
2. Glenmede Trust represents and warrants to the Portfolios that the
Shares is being acquired for investment purposes and not with a
view to the distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the 1st day of November,
1993.
THE GLENMEDE PORTFOLIOS
ATTEST:
/s/ Sheryl P. Durham By:/s/ Mary Ann B. Wirts
- ------------------------------ ---------------------------------
Its: Vice President Its: Exec. Vice President
THE GLENMEDE TRUST COMPANY
ATTEST:
/s/ Sheryl P. Durham By:/s/ John W. Church, Jr.
- ------------------------------ ---------------------------------
Its: Vice President Its: Senior Vice President
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